The Oil Drum

37 comments on Oil at $70, NG close to $12 on NYMEX in Sunday pre-market

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Anonymous on August 28, 2005 - 5:19pm

If Katrina sticks to the projected course tonight the economic effects of this event are likely to dwarf those of 9/11. Loss of life may very well exceed those of 9/11 as well. Unlike global trends in terrorism and "peak oil", this is a one-time non-structural catastrophe which the economy will recover from, although it may take considerable time.

My financial advice is to refrain from selling first thing tomorrow morning: believe me, the big boys will beat you to it and you will end up selling very close to the bottom. Your best chance to sell was at the beginning of hurricane season. At this point it's better to let the dust settle over the next week or two and consider shifting assets from cash and bond positions into beaten-down equities. Market moves in the short term reach extremes governed by emotion. Don't panic and keep to your long-term game plane. While you are at it set something aside for a charitable contribution - a lot of people will need your help to get through the next few months.

On the other hand it might not be a bad idea to fill the gas tank tonight before the brokers send out new numbers tomorrow.

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Donal on August 28, 2005 - 5:36pm

Y'know, we even heard the Weather Channel guys describing the danger to the oil rigs, etc. and advising people to fill up tonight before the prices rise tomorrow. I got an email from my wife:

"Jane was there and Tammy and Gary were going out the door. They were on their way to get their gas tanks filled. Jane had hers filled. On my way home, I thought about how hurried Tammy and Gary seemed to get to the gas station and thought ... it's beginning."

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baloghblog on August 28, 2005 - 5:43pm

wife and I did the same tonight. Told parents and friends as well, Most laughed it off. I told them that I was serious.

Feel better with a full tank, but I have to imagine that there is a week or two lag in the transportation of gasoline to buffer supply. Am I wrong? How long does it take the imported refined gas or new refined gas to make it to the pump?

Obviously price would shoot up, but when would true decreases in supply be felt after a disruption like this could be?

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mw on August 28, 2005 - 5:48pm

I think that's sound advice... selling at the very open is generally never a good idea, unless of course its to go short (I do this quite frequently in weak markets as has been of late).

Yet "longer term game plan" can take into account prolonged market weakness... lightening up on bounces may be part of one's plan.

Myself over the past month in my long-only accounts I've trimmed all non energy with the exception of a little bit here and there where an individual story still makes sense. Index futures I got short again early last week after returning from a week off.

Suspect we'll have to break out the Dow 10K party hats again before too long; whether it holds below there or not is another matter.