Monday, July 28, 2008

Insightful Comments On Oil


I am glad that there are plenty of intelligent readers out there and their comments on many issues are quite enlightening. Here are a few on "oil strategy" which is worth reproducing here:

Jackie Lee said... Special bulletin - Last week various analysts said there was talk that Mexico, the world's fifth largest oil producer, was hedging its bets - the country was said to be signing contracts to deliver oil several years into the future at today's prices. Essentially, it was betting oil prices have peaked. One analyst, speaking on background only, said he had confirmed Mexico was locking in futures contracts. He said it was being done at the behest of the Mexican government, eager to balance a long-term budget, rather than a bet by state oil company PEMEX, that prices will fall. But could Mexico's move inspire similar steps from other oil producers, and cause oil prices to fall further? "Absolutely," said Neal Dingmann, senior energy analyst at Dahlman Rose & Co., a New York-based energy investment boutique. "It could create a top in [oil prices] in the near term." Dingmann said about 50% of the production from the firms he covers - mostly small firms - has been sold for future delivery at today's prices.

solomon said...

If you checked some of the information posted in NYMEX and CFTC, you can notice that the speculation interest had dimmed for a while lately. My prediction last couple of weeks that USD120 /barrel had reached. It will hover around USD100-USD115 next few months, unless geopolitical situation change again. If Dali prediction is correct, equities will rise. In short term, I am positive on equities.

Ben Gan said...

The pictures you posted and together with the music are really refreshing. I like it. The fast retreat of oil from US147 to 124 per barrel is a good indicator that we have seen the peak of oil which is likely to remain unsurpassed for at least the immediate future.
As to whether 120 will be breached, it may not be able to do so in its first attempt.

Anonymous said...

Crude oil prices 'could hit $170 per barrel'. Prices for crude oil could rise as high as $170 per barrel this summer, according to the president of Opec. Chakib Khelil, predicted the increase from their current levels of around $134 per barrel in an interview with French television station France 24. He told the broadcaster: 'I foresee prices probably between $150 and $170 this summer. 'That will probably decline a bit toward the end of the year.' According to Mr Khelil among the factors set to influence the predicted...

The Rock said...

Raising the rate will not change inflation as it is a supply driven not Demand driven inflation. And if indeed the oil price and other commodities are on the way down, why raise rates now? I think Zeti is doing a better job than Ben ! or Greenspan. Traditional economic theories are no longer accurate in times of uncertainty like now. Look at the Eurozone. Is inflation coming down after ECB raised the rates? NOPE.

Note the timing of collapse of the oil trader in US and the reversal of oil futures a few weeks ago. Reported in The Edge recently. And Congress is debating 12 bills on measures to curb energy speculation. What would u do if u are a hedge fund? U take profit in case the Congress actually pass any of the law - since u have no idea of the outcome of the debates.

Net Long positions have dropped by more than 10% in the last few weeks alone from 1.36m to 1.21m. [The Edge] If LONG squeeze happens, oil may crash through USD100. There is no safe asset class anymore. Liquidity - the SWFs and a lot of mutual funds are sitting on piles of cash. Not the banks anymore.

p/s photos: Cholada Mekratree

4 comments:

Jackie Lee said...

You all can refer this news at this website:

http://biz.yahoo.com/cnnm/080717/071708_mexico_hedging.html?.v=8

By the time Mexico hedging its oils it was around USD 135 per barrel to USD 145 per barrel.

Anonymous said...

The price movement of equities has no positive/negative correlation to the movement of crude oil price. Both of them have their own timing of rise/fall. If u think the fall of crude oil price will lead to the rise in equities price then how can u explain from 2006 to 2007, the Dow Jones Index rise to break its record price and at the same time the crude oil also break its own ?

ming said...

very interesting and enlightening

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