Friday, Oct 24, 2008
Oil at $64.62
The Press Association: Oil producers to slash output
Oil cartel Opec has agreed to cut production in a move that is likely to halt the recent slide in UK petrol prices
Posted by sold 2 rent 1 @ 11:43 AM (634 views) Add Comment
13 Comments
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2. sold 2 rent 1 said...
Techieman,
What about these figures?
Oil rose from $12 to $147 and has now completed a 61% retracement to $64
USD index is 86.58 and the most overbought for a decade at least
Is today the bottom for oil and gold?
I think so.
3. planning4acrash said...
Gold is heading to 55. They are destroying middle east this way to proceed, or because they can't get war.
4. jack c said...
During the last recession oil fell to around $10 barrel and they dont want a repeat performance
5. planning4acrash said...
Oops, oil is heading to 55! This means shortages. Price controls always do. Middle east won't sell at this price. Will the break free and take gold or euro? That would mean war. Can't see russia staying out of it.
6. techieman said...
Actually s2r1 - i must admit that i have been wrong on this oil stuff! I was looking for a retracement from the 147 high and looking for confirmation indicators to get long, looking for 170 as a conservative move up. As you say (and ive kindve lost interest in this since i have been concentrating on shares) a 61.8% retracement is a key level. As you know unless profit taking i dont really look to buy bottoms and sell tops, so its a watching brief for me. Its interesting though a while back we had peak oil arguments on here, now we might have depression and therefore no-one uses oil kind of arguments. Which is why i use the technicals cause i aint clever enough to understand those fundementals. Re USD overbought - yes i said after completion of this move (eg £) classic bear squeeze is on the cards. I just wish i hadnt been finesed on my £ shorts - but money management is exactly that!
7. sold 2 rent 1 said...
p4ac,
"That would mean war"
Calleman's model doesn't have any war scheduled in for the next six months.
If fact we could see some piece breaking out
News: "India and Pakistan open trade route across Kashmir for the first time in 6 decades."
12 months time could be a different story, but any wars/conflicts will be short lived as change is being compressed into shorter and shorter time periods
8. drewster said...
p4ac, "Middle east won't sell at this price",
I think they'll sell at whatever price they can get. Unless OPEC can get their cartel working properly again, they have about as much control over the oil price as Gordon Brown. Must admit I'm surprised to see oil falling back so low, but consumption is clearly falling as consumers are cutting back. People are driving less, cutting out non-essential journeys, taking public transport, losing their jobs and not commuting to work any more, buying more efficient cars, driving less because they need the cash to pay down their mortgage debt, etc.
I remember a few months ago someone (possibly s2r1?) saying that the gold-to-oil ratio was out of kilter, meaning that gold had to go much higher. Somebody else pointed out that the ratio could equally be corrected by the oil price falling sharply. Gold is down heavily over the last few months, currently around $690.
9. jonb said...
I do believe in peak oil. It justifies a price of around $50/barrel vs the previous much lower rates. We are still above that level.
The reduced demand resulting from the economic downturn will delay peak oil, and as a result, oil could easily go below $50 in the short to medium term. When it goes below $50, that is the time to start thinking about buying it.
10. sold 2 rent 1 said...
drewster,
Just as we have seen a disconnect between physical and paper gold demand, the same is true for oil.
Oil went from $50 to $147 to $64.
Is this physical or speculative demand?
At least 60pc is speculation.
And when oil goes to $400 in 2010 it will be a mania based on "engineered" peak oil and dollar collapse.
gold/oil ratio is at 10.7 up from a multi-decade low of 6 in July.
11. maddison said...
Oil was just another asset that was pumped up by hedge funds and speculators.
12. goweresque said...
The oil production cuts will have little or no effect on the price. There is a vicious downward demand destruction spiral going on at the moment and oil will continue its downward path. The smaller OPEC countries will probably secretly ignore the production reduction anyway as they are addicted to the revenue the oil brings. If China continues its path towards lower growth (anything under 6% growth for China represents effective recession) then there will be another round of demand destruction. I think oil could go back to $20-30/barrel if China hits the buffers.
13. Kruador said...
maddison@10: absolutely.
There never was a problem with supply and demand. The war in Iraq did not affect supply - in fact supply from Iraq has increased since 2003, as the oil-for-food programme was shut down before the war started and had been a tiny trickle before that anyway. Actual demand for road travel has dropped 3-4% in the US up to July: http://www.fhwa.dot.gov/ohim/tvtw/tvtpage.cfm.
The price on ICE for WTI crude has dropped a further dollar since p4ac posted. In fact the only thing bucking the trends right now is UK Natural Gas, which has been dropping slowly over the course of this month's contract. There's not a lot of trading in this contract which I suspect means it is mostly traded by physical hedgers, rather than by speculators as is the case for the crude oil contracts. See for example: https://www.theice.com/marketdata/settlementPrices/getDailyVolumeOIResults.do.