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46 comments on The back side of the curve

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ABAPer on November 10, 2005 - 12:56pm Permalink | Subthread | Parent | Comments top
Hi Guys

The declining price signal article is oh so predictable...

We saw the same when the oil price went from $30 to $45 dollars and then eased to $40 and everyone gave a big sigh of relief and started back to investing as usual...

Then when oil went from $40 to $55 and then eased to $50 everbody in the markets yet again celebrated... etc.. etc..

The market is so dumb it hasn't even noticed that the price has risen by $20 a barrel along the way and is in a continueing long term up trend.... We get the slightest fall back and the flags come out... why... because that is what the market wants, it wants oil to be coming down in price...

Looking at the graphs it would appear we have at least one more wave in this cycle of advances and then it might just turn out that the whole of this run was just the start of a bigger formation...!

Why can't the economists see that energy drives economics and not the other way around... it seems just so obvious to any logical mind...?

I hope to be in a posistion to start spread betting on the oil price with the next wave... It seems the only way to safely navigate the storm is to ride the wave out... With the money perhaps I will invest in some local industry that is having a bad time right now that will be relocalised by necessity after the peak...

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Essex Land Rover Man on November 10, 2005 - 1:12pm Permalink | Subthread | Parent | Comments top
Be careful. It is not as easy to make money as it seems. About 80% of traders lose money. Interday  fluctuations are bigger than the overall day to day changes. My gut feeling is prices will drift lower until the start of the cold weather in the NE USA and stocks begin to fall/demand is recognised as improving (which the big traders seem to not believe in at the moment) which could be late November or early December. Then the upward rally will begin, I guess until April/May. Then we wait for Bush (with help from Blair?) to bomb Iran to stop the Iranian Oil bourse selling oil in Euros - sorry meant to say to stop the Iranians from building nuclear weapons. Just because you (and I know about peak oil, it doesn't mean the market will react in the way you expect it to.
Anybody else have a feeling on how the markets will behave before Christmas?
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bigfootvegan on November 10, 2005 - 2:17pm Permalink | Subthread | Parent | Comments top

I totally agree with your forecast, think it will stay around this price for next two weeks.
 Where does a complete novice go to buy oil futures?  I am sure oil is under priced and would like to help my exit strategy "slush fund"
any advice on this from anyone would be very much appreciated.
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LevinK on November 10, 2005 - 2:18pm Permalink | Subthread | Parent | Comments top
My explanation about the failure of the market in this situation is that the price volatility hence the risk becomes too high for the speculators. Thus they restrict their activity even though they are basically pretty confident on where the market is headed to.
The price is then determined by the marginal barrel - and since supply is locked for months on, every 1% drop or rise in demand results in huge deviations in a continuous self-reinforcing process.
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step back on November 10, 2005 - 2:36pm Permalink | Subthread | Parent | Comments top
I see today's price drop for crude futures (down to around $57/bbl) as being mostly political.

The Washington b.urea.ucrats have spoke their magic words of power: "Mr. Gorbechev bring down those oil prices."

Lo and behold, the waters have parted and new abiotic oil has sprouted forth from impermeable rock formations in the desert kingdom. The Price Signal proves beyond doubt, the power of Congress over all things investigated.

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Francois on November 10, 2005 - 2:39pm Permalink | Subthread | Parent | Comments top
About the only thing the oil markets have proven is how right the peak oil premise is with respect to price volatility on minor demand/supply imbalances.

I really dont know how the present lower demand / higher supply is being effected - be it through the SPR release, gasoline imports, people flat out broke and not buying or whatever. As an investor you should be very afraid of being on the wrong side of this see-saw even

Francois

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bigfootvegan on November 10, 2005 - 3:24pm Permalink | Subthread | Parent | Comments top
if the price went below 57 it will still go up beyond that price at some point surely?
is it possible oil could stay below 57?

I completely agree with you that the price is volatile

but surely demand will soon outstrip supply and when that happens the price will go up

why wouldnt people who think this all invest in oil?

which would then mean that peak oil believers would all be hyping bad news to increase there funds???

is this what simmons is doing?

ohhh I am so naive.....

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Oil Trader on November 10, 2005 - 3:40pm Permalink | Subthread | Parent | Comments top
Dec 11 contracts are selling for $53 a barrel This could be the last good buying opportunity. It could fall some more but if you can ride it down it will be worth it. The chance of it spiking well over $100 is far greater than it falling back to $30. Thats how to trade just guess the odds. and have a long term view.
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Khebab on November 10, 2005 - 9:36pm Permalink | Subthread | Parent | Comments top
Let's have a look at the last three years:

Prices are still around the linear trend observed since September 2003. They are now dropping the same way they did last year around Bush reelection. They could go as low as $55 but probably not for long.
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