Sweet, sweet Oil

Opec pledges to push oil above $50

"Opec members need an oil price above $50 a barrel to make exports worthwhile, the head of the cartel said today, adding that more production cuts were possible this year."

So hang on to your f'ing hat

http://business.timesonline.co.uk/to...cle5611045.ece

Don't remember where, but was reading article about how hedge funds and speculators drive price of oil. The theory was that with so many funds belly-up the lack of speculative trading will keep price lower.

Some love to point the finger at the speculators. Last year, when the price of oil was so high that people stopped driving around, the speculators where getting blamed. Gas was getting more expensive for Americans while it was getting cheaper for the Europeans.

So it wasn't so much about oil going up than the dollar going down.

Hedge funds and speculators, for the most part, react the price movements and don't make it happen. I speculate on the movement of the EUR/USD all the time and it certainly isn't me causing the movement.

At the end, OPEC calls the shots.

According to Henry Waxman The CEO of Shell and the other greedy oil shooters have a conference call every AM and set the price of oil/gasoline before they finish their coffee.

I'm certain that the oil guys are shooting the breeze on a regular basis. But from that to say they are talking daily to decide the price of oil/gas before they finish their morning coffee? I don't think so.

But just for fun, let's go out on a limb and say that they did. I fail to see how the logistics would be applied. The price at the pump vary from one city to another depending on state and local taxes. So how would the information be decided on and dispatched so rapidly? Some of these retail shops are "ma & pa" operations so emailing or texting is out as it would not get the message to everyone in time.

Maybe someone on this forum is familiar with the inner workings of a gas station and fill us in. But so far, I don't see how it would be done.

If the truck charges you $2 per gallon, you're going to have to charge more than that to turn a profit. The truck's price is a function of the price of oil, the crack spread, and transportation costs (distance from a refinery, distance from oil supplies).

So price of oil is expected to go up, the refinery raises it's price, the truck raises it's, and the station has to raise it's.

Fair enough Rabid. The only caveat that I can see is that the price changes daily but the truck doesn't show up every day.

Well, price changes to some degree daily, but the price changes don't reflect back to the stations every day. They have to take in account what they think gas will run, but they can't go too far with it since competition will keep the price down quite a bit.

There's a lot of pain in that industry right now. Stations weren't able to pass changes on to customers, and credit card payments take a percentage of the overall... meaning that margins were very very slim. Increased theft made many stations unprofitable.

Now they're facing a decrease in demand and slowing sales, taking it on the chin again.

Oil won't find support to rise much until US consumption increases again. Watch for an improving housing market.

"Oil won't find support to rise much until US consumption increases again"

What are your thoughts on those saying that China and India will pick up the US oil consumption slack? It's argued that the Chinese stimulus package is a step towards creating a middle class of their own. If they did, they could easily accomplish this.

Don't trade on fundamentals, they don't mean squat in a bear market. Never have, never will. Markets are correlated, a down US market means a down Chinese market.

Assuming the Chinese stimulus is going to big as the authorities are saying, (which is in itself a leap of faith), can the Chinese succeed in growing their middle class in the midst of a worldwide downturn the likes of which haven't been seen since the 1930's? Factory and exporting-industry job layoffs are so bad that the authorities are worrying about another Tiananmen Square. I think China will develop a stable, automobile driving middle class in the future, but it won't be soon. Decoupling is dead. China, for the foreseeable future, needs western consumers.

wot are u upto in here youngman?
am interested in crude-oil coz nigeria economy is crude-oil driven

just started a new thread for crude oil..am trying to fix the thread..how has trading been bro...

trading is OK, though network challengings, presently, i have 5 networks, can u imagine.......... naija for real, he go better.

trading my normal method, abcd/12345 method. i will do some contributions in ur usdjpy and gbpjpy thread as i trade usdjpy and 3 other pairs only.

have a nice day bro
remain blessed

What do forex traders think about oil for the rest of the year ?

I'm $75.

$50 was recession / panic price.

$100 so look like speculative level / huge psychological level.

$75 the average...

I'm actually long a Brazilian oil company waiting for $75.

after making loads of the mad run on oil last year i just started scalping oil, only trading small lots as i want to test how my scalping would be on oil.

So far so good but i still think we could see a huge rise in oil as the world markets get better and demand goes up $150 oil may be on the cards. Look at gold near $1000 due to demand growing.

anyhow for now i have 1 x long term trade on oil from $40.00 target is $100 or above and i will just keep scalping

I think it will end up 48-50 for 2009; the demand will drop a bunch because of the weak economy…

WTI crude oil for July delivery spiked to 70.32 as soon as the US Labor Department reported that the decline in non-farm payroll was -345K, significantly better than consensus of -530K and -504K in the previous month. However, strong rebound in USD against major currencies snapped gains in oil, as well as other commodity prices, and the gauge finally closed the day at 68.38, -0.6%.
The black gold has experienced an eventful week with USD and market sentiment the major price drivers. Moving up in 3 out of 5 days, the crude oil gained 3.1% but it already meant a plunge to as low as 64.95 and then a breach of 70 to 70.32, a level not seen after November 5, 2008.
Robust market sentiment has continued to overwhelm fundamentals and pushed oil price higher. Earlier last week, large economies including China, the US, the Eurozone and the UK reported strong PMIs which stimulated confidence of earlier economic recovery. Although in the middle of the week, the US Energy Department caught the market by surprise with a +2.8 mmb increase in crude stockpiles. Pullback in price was short-lived. Not until the broad based strength in USD Friday did the commodity meet selling pressure.
Oil demand outlook remains mixed. While recovery has been seen in emerging markets, weaknesses are still prominent in OECD countries such as US and Japan. We worry that recent rally in oil prices begin to hurt consumption as retail gasoline prices in the US have increased by +20% mom. IEA executive director Nobuo Tanaka had warned that rapid rise in oil price may damage the outlook on economic recovery.
Concerning supply, survey showed that OPEC oil price rose in May while preliminary estimates by tanker trackers showed that another rise will be seen in June, indicating risk to disciplines of OPEC members. For non -OPEC producers, some have showed declines in oil outputs but the results were smaller than expected.
We continue to believe present oil price has soared to a level too high to be justified by fundamentals. Although it's possible that future economic recovery will tighten oil markets, before we see more unambiguous signs from oil-specific data, we tend to stay cautious on oil price.

Oil bearish action was stopped at 50% Fibonacci whereas the price inclined once more, reaching $ 68.50 a barrel. We see that additional downside movements are anticipated today as a result for the negative pressure appearing on the momentum indicators, targeting to reach the lower line of the upward channel at 65.15 but note that 67.56- minor support- should be broken first and also 68.90 should protect this scenario
The trading range for today is among the key support at 65.15 and the key resistance at 71.85.
The general trend is to the upside as far as 47.20 remains intact with targets at $73.00 a barrel.
Support: 67.56, 66.65, 65.15, 64.30, 63.40
Resistance: 68.90, 69.45, 70.20, 70.70, 71.40
Recommendation: According to our analysis, sell the contract below 67.56 with targets at 66.65 followed by 65.15 and stop loss with a four-hour close above 68.35.