So down, because demand is 'soft' as OPEC puts it?

Interesting.

What was masking this all along for first half of '08? The China pre-Olympics demand (as claimed by OPEC)?

the vehicles in the poker room parking lots are SUVs again

A CRITICAL leading indicator !

Best Hopes for Price Elasticity of Demand,

Alan

Moe,

I really appreciate your insights on the market. I've read many-many posts of yours, so this time I'll keep it very simple by asking:

Do you think there is a floor to WTI spot in the ***PRESENT*** geopolitical and economic situation - and if so what's that level?

***PRESENT*** i.e.: coming recesseion in Europe, financial troubles everywhere, relatively strong dollar, relatively weak Chiniese demand and the BTC closed *** PRESENT***

(My reading of the situation very briefly: 107-108 floor now, prices in trading range between 110-130 until mid September, price spike in October and WTI spot at USD 150 in late November)

What's yours?

all the vehicles in the poker room parking lots are SUVs again

ROFL!

I do remember posting during oil's rise early this year that I didn't think $3.50/gal was high enough to cause lifestyle changes. I posted later that $4.00/gal looked like it was. Around here we're back in the $3.70 range, and I don't think that's high enough. Here's hoping gasoline moves back up to $4.00+.

BTW, it seemed to me oil had a nice close today. It looked like it had been trying to set up $113 as a floor. All week it has bouncing back up every time it dipped below $113. Today it as low as 111-and-change and stayed below 113 almost all day, until a rise late in trading pushed it back over 113 (~$113.50 at the moment).

Its more a process of deduction something is going down. I don't know what but the only thing that makes sense now seems to be a strike on Iran. The evidence points to big things in the offing before the election. Iran is all I can come up with.

In the absence of war my best guess is probably between 120-145 and as I said before 160 by Dec. The problem is I expect a price spike to 160 by end Dec at the latest and I've confident the spike can start from wherever we are say 110 and blow through 150 in a matter of weeks. Timing a spike like this is impossible.

It could ramp up a bit then take off or go right up who knows. We had basically or first real post peak volatility move over the last 6 months. The next one will be stronger and faster.

The assumption is that the current price of oil was artificially depressed and KSA will use it as an excuse to cut when in reality demand is going to come surging back.

Read about gold the price of gold is tumbling right now but you can't buy any real gold. Oil in my opinion is right now in the same strange setup the price is really low but I bet if you want to take delivery no one has any for sale.

from the "Automatic earth" :

Massive US Naval Armada Heads For Iran

http://europebusines.blogspot.com/2008/08/massive-us-naval-armada-heads-...

Operation Brimstone ended only one week ago. This was the joint US/UK/French naval war games in the Atlantic Ocean preparing for a naval blockade of Iran and the likely resulting war in the Persian Gulf area. The massive war games included a US Navy supercarrier battle group, an US Navy expeditionary carrier battle group, a Royal Navy carrier battle group, a French nuclear hunter-killer submarine plus a large number of US Navy cruisers, destroyers and frigates playing the "enemy force".

The lead American ship in these war games, the USS Theodore Roosevelt (CVN71) and its Carrier Strike Group Two (CCSG-2) are now headed towards Iran along with the USS Ronald Reagon (CVN76) and its Carrier Strike Group Seven (CCSG-7) coming from Japan.

They are joining two existing USN battle groups in the Gulf area: the USS Abraham Lincoln (CVN72) with its Carrier Strike Group Nine (CCSG-9); and the USS Peleliu (LHA-5) with its expeditionary strike group.

Likely also under way towards the Persian Gulf is the USS Iwo Jima (LHD-7) and its expeditionary strike group, the UK Royal Navy HMS Ark Royal (R07) carrier battle group, assorted French naval assets including the nuclear hunter-killer submarine Amethyste and French Naval Rafale fighter jets on-board the USS Theodore Roosevelt. These ships took part in the just completed Operation Brimstone.

The build up of naval forces in the Gulf will be one of the largest multi-national naval armadas since the First and Second Gulf Wars...

I don't know for sure how low oil will go. 80-85 is one of the technical limits 110 is another. So far the supports holding fairly well at 110.

What we do know from past experience is that a ME war generally causes a big spike in prices lets assume that they will double if we strike Iran. If this happened at 145 then it would have been devastating but by pushing the price down to say 100 then we would only see something like 200. Given that earlier this year it looked like 160-200 was a sure bet without a strike by pushing the price of oil down like they have we just about get the price spike for free.

If they get it down to 80 which would be surprising the the attack on Iran costs almost nothing on the price front since it would spike to 160 from the attack. Understand that I think we will hit 160 in December with or without and attack on Iran.

Whats weird is the math works out. Lets assume over the next month or two that even though the price is low OPEC will cut way back on deliveries. With maybe one more surge sending all the tankers out before the strike.

This gives them 3 months of low prices lets say 100 on average. After the strike we see prices go to say 200 which would happen lest say 6-8 months early. So in exchange for pushing prices down now for a few months they get 6 months of 200 dollar oil early as a present.

Given that I think the real price in Dec should be 160 this is a 40 dollar war premium. Assume the real price right now was say 140 instead of 100 or so then they make back the depressed price in a few months.

Net result is it cost OPEC nothing and the war spike from 80-110 keep us in a bearable price range where as a spike from 140-150 probably puts us into the red zone of 200 dollar plus oil.

The point is no matter what we are going to see a price spike but the interesting thing is that the way things are setting up the spike can be attributed to and attack on Iran if they execute.

The effect of and attack on Iran on the price of oil has been cut at least in half by what is in my opinion manipulation of the markets coupled with the large surge of oil right when the the market is weakening.

Obviously and I stress I could well be all wrong but the thing that lead me down this path is that the price of oil will have to naturally start heading up before the election if they wanted to ensure really low oil prices during the election then this surge would have had to come later on in Sept.

We will see but I'd not be presenting this scenario if I could come up with a better answer. My previous one of cheap oil for the election just does not work out well enough. That may be all thats going on but its pretty weak vs the above.

No comment wait and see :)