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I see oil reaching 100 USD?!

  • #21
  • Oct 3, 2007 8:01pm Oct 3, 2007 8:01pm
Quoting clockwork71
Also, if it were to get to $100....Anwar protection would cease to exist...
???
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
  • #22
  • Oct 3, 2007 9:02pm Oct 3, 2007 9:02pm
I think he may mean (ANWR) Arctic National Wildlife Refuge. There is purported to be a lot of oil under that tundra
In trading, there is no bullshit. You either make money or you don't.
  • #23
  • Oct 3, 2007 9:43pm Oct 3, 2007 9:43pm
Funds converting US$ into crude. Crude trades in US$ and if it goes higher (assuming the funds are long) they get more US$. Not whats wrong with this picture?

That is if the object was to protect themselves from a declining US$.

Seems the better solution would be to trade against the US$ with..... currencies.
  • #24
  • Oct 4, 2007 12:19am Oct 4, 2007 12:19am
Quoting merlin
i disagree for one reason... OPEC does not want expensive oil!

what happened when oil hit $70 last year? everybody and their mother was trying to put vegetable oil in their car, hybrid became a fad, and bush declared the US is an oil crack addict LOL.

OPEC saw all of this and got scared shitless. its simple economics, when things get expensive people look for alternatives. nobody knows this better than OPEC. they want a goldilocks price, not too cheap that they leave money on the table, but not too expensive where they force people to develop oil alternatives. i believe this price is somewhere around $65.
very good point,...as i know opec is defending the 70s, thats why we are at 80s (interesting that when they increased production by i dont know how much,...it went even more up),...but for the second week the news were slightly bearish for oil (no -) , still a small decline in oil inventories per week...
and china oil stocks went down by 7 and 8 yesterday,..and dolar "finaly" gain some foot against the euro... on the other hand why is it so hard to trade tops and bottoms...
its just money
  • #25
  • Oct 4, 2007 2:37am Oct 4, 2007 2:37am
Quoting merlin
i disagree for one reason... OPEC does not want expensive oil!

what happened when oil hit $70 last year? everybody and their mother was trying to put vegetable oil in their car, hybrid became a fad, and bush declared the US is an oil crack addict LOL.

OPEC saw all of this and got scared shitless. its simple economics, when things get expensive people look for alternatives. nobody knows this better than OPEC. they want a goldilocks price, not too cheap that they leave money on the table, but not too expensive where they force people to develop oil alternatives. i believe this price is somewhere around $65.
I agree with you. If oil is way too expensive, even if US and Japan can buy its expensive oil, people would switch to alternative fuels. Well, Japan's absolute must is departure from dependence on oil, I really hope for hybrid technology advances.
About vegetable oil, we also watched the news on TV, we thought it was "match-pump"(this Japanese-English word means that man puts out fire by pump while burning with a match. "Self do, self have"). Such as wheat, sugarcane and orange went up in prices, but it is akin to putting a noose around speculators' own neck...
Peace and Happiness through Prosperity (by Konosuke Matsushita)
  • #26
  • Oct 4, 2007 5:30am Oct 4, 2007 5:30am
Quoting mrgreen
I think he may mean (ANWR) Arctic National Wildlife Refuge. There is purported to be a lot of oil under that tundra

DING! DING! DING! We have a winner.....Mr.Green gets his Super Geography Badge.



Yes, that is what I meant.....

Good discussion though, as it's much more thought out than say......"GBP/JPY is going to the moon....."
  • #27
  • Oct 6, 2007 12:10pm Oct 6, 2007 12:10pm
Quoting mrgreen
There is purported to be a lot of oil under that tundra
there is oil everywhere!! its just a matter of how much it costs to extract it. canadian oil sands are prefect example, with oil at a certain price it become profitable to process the sand. same thing applies to deep-sea drilling, because there is added technology cost when drilling that far down.

looking at oil as some fixed supply is a big mistake. why do we use oil in the first place? its certainly not the only source of energy (shit, i can clap my hands and create energy). we use it because its the cheapest and most practical source of energy. and when those qualities go away, so does its use.

now, there is another huge factor in all this, and that is infrastructure. the worlds infrastructure is setup to run on oil. even if we figure out how to make power with water, you still need cars that can run on water, and water-stations to replace gas-stations. so we will never see a sudden shift from oil, it will be a slow moving process. but last year we saw that process get started as alternate fuels became the buzz. OPEC saw this too, and they sprung into action, and i believe they will continue this trend.
Relax and be happy.
  • #28
  • Oct 6, 2007 1:55pm Oct 6, 2007 1:55pm
Quoting merlin
yes great points nader! and if i remember correctly, the dollar was strong while you and me were making a killing shorting oil last year.

regarding the future of oil, i still think the best way to make money is on the short side. im nowhere near ready to short it now, but if i see some kind of sharp pullback im looking to do the same play as last year - ride it short through the stops!
I totally agree with you Merlin. I am not yet ready to short it as well. When the USD starts to stall and oil keeps moving up, the time to start initiating short would be very near.


Thanks,

Nader
  • #29
  • Oct 6, 2007 1:57pm Oct 6, 2007 1:57pm
Quoting Plutonite
Merlin & Nader: If you don't mind me asking, what brokerage are you trading crude with?
I use InteractiveBrokers as well for all my trading. They are great in futures and options on futures.


Thanks,

Nader
  • #30
  • Oct 6, 2007 2:00pm Oct 6, 2007 2:00pm
Quoting merlin
i disagree for one reason... OPEC does not want expensive oil!

what happened when oil hit $70 last year? everybody and their mother was trying to put vegetable oil in their car, hybrid became a fad, and bush declared the US is an oil crack addict LOL.

OPEC saw all of this and got scared shitless. its simple economics, when things get expensive people look for alternatives. nobody knows this better than OPEC. they want a goldilocks price, not too cheap that they leave money on the table, but not too expensive where they force people to develop oil alternatives. i believe this price is somewhere around $65.
But OPEC have nothing to do to bring prices down to this level as they have several limitations related to production.


Thanks,

Nader
  • #31
  • Oct 6, 2007 2:09pm Oct 6, 2007 2:09pm
Quoting SunTrader
Funds converting US$ into crude. Crude trades in US$ and if it goes higher (assuming the funds are long) they get more US$. Not whats wrong with this picture?

That is if the object was to protect themselves from a declining US$.

Seems the better solution would be to trade against the US$ with..... currencies.
Well, agreed. This is exactly what a well diversified fund would do. And remember that other currencies suffer from inflation and declining buying power as well.

Of course they hedge against a declining dollar through currencies, but they can't neglect commodities since there is a difference between both from a fundamental point of view.

Regardless of this, hedge funds are speculative and are looking to achieve dollar returns as high as possible for their clients.

Other conservative dollar based funds are now in a harder situation. Most funds benchmark against indices, however, I believe that they have to include other benchmarks in the formula. If the index you are benchmarking yourself against is up 20% and your fund is up 25%, you are considering yourself to be ahead, however, if the USD index declined during the same comparison period by 10%, you would be behind.

What I was saying is that funds are diversifying their porfolios towards commodities and getting rid of their USD cash to participate in the marathon anticipating that the USD decline is to continue.


Thanks,

Nader
  • #32
  • Oct 6, 2007 2:19pm Oct 6, 2007 2:19pm
Quoting merlin
there is oil everywhere!! its just a matter of how much it costs to extract it. canadian oil sands are prefect example, with oil at a certain price it become profitable to process the sand. same thing applies to deep-sea drilling, because there is added technology cost when drilling that far down.

looking at oil as some fixed supply is a big mistake. why do we use oil in the first place? its certainly not the only source of energy (shit, i can clap my hands and create energy). we use it because its the cheapest and most practical source of energy. and when those qualities go away, so does its use.

now, there is another huge factor in all this, and that is infrastructure. the worlds infrastructure is setup to run on oil. even if we figure out how to make power with water, you still need cars that can run on water, and water-stations to replace gas-stations. so we will never see a sudden shift from oil, it will be a slow moving process. but last year we saw that process get started as alternate fuels became the buzz. OPEC saw this too, and they sprung into action, and i believe they will continue this trend.

Other than the fact that when prices increases people start looking for alternatives, when prices increase, people usually look to consume less if they can't find a cheaper or a safer alternative.


Thanks,

Nader
  • #33
  • Oct 6, 2007 2:58pm Oct 6, 2007 2:58pm
Quoting narafa
But OPEC have nothing to do to bring prices down to this level as they have several limitations related to production.


you think OPEC cant control the price of oil? that is their purpose of existence!! thats like saying the BOJ cant control the price of the yen

production is only one tool they have, there are several more in their box. and who says they dont have "open market operations" like central banks do? OPEC is under no obligation to make their dealings public, they are a cartel!
Relax and be happy.
  • #34
  • Oct 7, 2007 1:57pm Oct 7, 2007 1:57pm
Quoting merlin


you think OPEC cant control the price of oil? that is their purpose of existence!! thats like saying the BOJ cant control the price of the yen

production is only one tool they have, there are several more in their box. and who says they dont have "open market operations" like central banks do? OPEC is under no obligation to make their dealings public, they are a cartel!
Of course they can control the price of oil, but to a certain extent. Things get out of hand sometimes, while during other times, things are just aligned to their favor


Thanks,

Nader
  • #35
  • Oct 7, 2007 2:16pm Oct 7, 2007 2:16pm
yeah you got me thinking with this one narafa. i was thinking about my comments, about OPEC being like a central bank. my philosophy is usually to trade against intervention, because market forces are stronger than any central bank.

we all know price is determined from supply and demand. central banks, and OPEC, only have control over the supply side of the equation. they can do hardly anything about the demand (except in the case of central banks, they can change interest rates).

so this makes me wonder, is it really smart to trade with OPEC, or is the better move to trade against them? the answer i believe is twofold... trade with them short term, against them long term. what i mean is only short oil short term while i think OPEC is intervening, but long oil in the long term.
Relax and be happy.
  • #36
  • Oct 7, 2007 2:30pm Oct 7, 2007 2:30pm
Quoting merlin
so this makes me wonder, is it really smart to trade with OPEC, or is the better move to trade against them? the answer i believe is twofold... trade with them short term, against them long term. what i mean is only short oil short term while i think OPEC is intervening, but long oil in the long term.
Well, that's a tough question and a hard situation

For myself, I know that I won't dare to be long oil for the long term since I can't withstand to see oil dropping like a rock while reversing the long term trend against me because the world economy shifted from inflation to stagnant growth or deflation. Sure oil can't go to zero, but it can go to $30 and stay there for a year or two and this would be a disaster to longs if they are still living the drawdown.

I am with you in the short idea, however, I believe that the entry would be the most critical factor in this, we'd better be careful.


Thanks,

Nader
  • #37
  • Edited 3:39pm Oct 7, 2007 2:37pm | Edited 3:39pm
I wouldn't worry too much about OPEC; it's market share has dropped from 70% a decade ago to maybe 40% now. Big drivers in US oil prices have been things like processing problems (particularly last winter), the falling $, speculation (a good article in this Saturday's WSJ on Cushing for that), and the real big unavoidable, ramped up consumption in China. Expect that to become even bigger, if/when they start moving off coal as their primary hydrocarbon.

(added on edit)FWIW, Xinhua has reported that China's imports are up 18%+ in the first 8 months this year.
  • #38
  • Oct 7, 2007 3:42pm Oct 7, 2007 3:42pm
Quoting HalifaxCB
(added on edit)FWIW, Xinhua has reported that China's imports are up 18%+ in the first 8 months this year.
yeah saw that one: http://www.forexfactory.com/news.php?do=news&id=50588

interesting that they are getting 50% of their oil domestically.
Relax and be happy.
  • #39
  • Oct 7, 2007 3:54pm Oct 7, 2007 3:54pm
i was just reading through some of my old calls on oil. its a funny thing these internets:

this one from jul 06 when oil was topping out at $78
Quoting merlin
also on the fundamental side, you have all the oil producers NOT wanting oil to go any higher. why would the people selling oil not want high oil prices? well because thats when everyone starts using alternatives. they want oil high, but not too high that people start using alternatives (which is starting to happen right now, ie all the talk of putting corn in our gas tanks).
guess my views havent changed much
Relax and be happy.
  • #40
  • Oct 7, 2007 5:13pm Oct 7, 2007 5:13pm
Quoting merlin
i was just reading through some of my old calls on oil. its a funny thing these internets:

this one from jul 06 when oil was topping out at $78


guess my views havent changed much
Well, as you mentioned corn, did I mention that I am currently long corn futures : at the moment.


Thanks,

Nader
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