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Oil Prices Have Peaked And Are Only Going Down

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I've read 2 articles in the blog that have cited dropping oil prices as a reason why everything is hunky dory.

Is there something I've missed. Whilst the $90 a barrel price of oil last year might have been a spike, the general trend is still upwards.

Demand is going up, oil is running out - add to this the fact the Middle East is no more stable than it has ever been.

Maybe I'm missing something

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Oil's up about 10% in the past couple of weeks and still seems to be rising. Locally the pain seems to be starting with letters to the editor of papers etc.

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$90/oil? Must have missed that.

Oil is partly expensive because of lack of refining equipment. Also, like houses its partly expensive because of speculation. As much as I would like to have oil prices rise further to encourage investment in renewables, I can't see it happening. Wthout a major supply side shock, oil prices will fall I believe.

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Wthout a major supply side shock, oil prices will fall I believe.

We have had one in the form of Hurricanes Katrina and Rita.

It's just playing out a lot slower than many people expect. The oil market is funny like that sometimes. Watch what happens to the US gasoline market ahead of the summer.

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Oil will start dropping in about 8 weeks, once the end of winter is in sight, by about mid March. It is unlikely we will then get a protracted winter spell and demand will start to drop

My guess is $50 a barrel by June 06.

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We have had one in the form of Hurricanes Katrina and Rita.

It's just playing out a lot slower than many people expect. The oil market is funny like that sometimes. Watch what happens to the US gasoline market ahead of the summer.

No, those have already been factored into the price and as those facilities are repaired the price will come down. In fact the price will come down before they are completly repaired because the markets work on expectations on future outputs, not current outputs.

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Oil will start dropping in about 8 weeks, once the end of winter is in sight, by about mid March. It is unlikely we will then get a protracted winter spell and demand will start to drop

My guess is $50 a barrel by June 06.

Im not 'into' oil at all so all correct me if im wrong but i think opec have said they will defend $50 a barrel and isnt recent pre-spike average per barrel about $30. IF im right thats a massive increase.

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Oil will start dropping in about 8 weeks, once the end of winter is in sight, by about mid March. It is unlikely we will then get a protracted winter spell and demand will start to drop

My guess is $50 a barrel by June 06.

CRB index sitting at or around new highs, printing presses still whirring away in gay abandon, $70 just as likely. I think you'll find as soon as the winter ends there will be talk of the driving season. In reality this is still fluff because overall oil demand is not falling or even stagnant and new finds are not matching long term growth. In fact the very "economic growth" that the central banks are encouraging are just exacerbating the situation.

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Wthout a major supply side shock, oil prices will fall I believe.

How about this for a supply side shock then?

Jan. 9 (Bloomberg) -- Crude oil rose to a three-month high after Iran said it would restart its nuclear program, a decision that could threaten exports by OPEC's second-largest oil producer.

Iran will resume research on the nuclear fuel cycle today, according to state-controlled television. The U.S. says Iran is trying to develop atomic weapons and wants United Nations sanctions imposed. Sanctions could lead to a confrontation with the U.S., slowing or halting Iranian exports.

Edited by Surrey cash buyer

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Oil will start dropping in about 8 weeks, once the end of winter is in sight, by about mid March. It is unlikely we will then get a protracted winter spell and demand will start to drop

My guess is $50 a barrel by June 06.

When the end of winter is in sight, it will be nearly time for the US driving season, and the penny will really drop that there isn't enough gasoline supply in the US.

My guess is $70 a barrel by June 06.

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No, those have already been factored into the price and as those facilities are repaired the price will come down. In fact the price will come down before they are completly repaired because the markets work on expectations on future outputs, not current outputs.

The price DID come down because of refineries coming backetc. However now the immediate crisis has passed, the longer term problems are becoming clearer, hence crude futures now in the mid-$60s. Refiners in the US spend much of the year making gasoline to build stocks ahead of the summer rush (Americans really do drive a lot more in the summer!). A huge amount of that refinery output has been lost forever, millions of gallons of gasoline, and the market will feel the impact of that sooner or later. Strategic stocks releases were just a sticking plaster.

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Couple of tidbitz:

RAC Cost of Motoring Index - fuel up 11% in SIX MONTHS :o

The index, which tracks all costs associated with owning and running 17 different models of car also reveals that rising fuel prices have increased the yearly fuel bill to £1,154, or £22.20 a week, an increase of 11% in six months!

Natures Atomic Bombs!

The 2005 hurricane season has also broken records, not just by having the most named storms, the most named hurricanes and the most category 5 hurricanes. But the accumulated cyclone energy (ACE) for 2005 was also greater than any other year on record.

Another Caribbean Hammering in 2006? -

So, finally, we can bid farewell to one of the most incredible seasons in history, and perhaps "look forward" to next year, which is expected to follow 2005 as yet another active hurricane season.

Will the oil refineries be hit again in 2006??

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I've read 2 articles in the blog that have cited dropping oil prices as a reason why everything is hunky dory.

Is there something I've missed. Whilst the $90 a barrel price of oil last year might have been a spike, the general trend is still upwards.

Demand is going up, oil is running out - add to this the fact the Middle East is no more stable than it has ever been.

Maybe I'm missing something

2006 will be an important year in the evolution if peak oil. The annual rate of increase of global production has been slowing whilst prices have been rising, a pretty fair case to suggest that production is at or very near capacity. The refinery issue is rather a red herring, since lack of refinery capacity would not increase the price of crude oil (it would be more likely to cause it to fall as too much production sloshed against the obstacle of refinery capacity). This link to a close study of production in the last few years:

http://www.theoildrum.com/story/2005/12/22/41839/374#more

appears to suggest that 2005 or 2006 will indeed be peak production years and in that case oil will go up until the global economy falls into recession; then the price will collapse, to follow with recovery, another oil crisis and another rebound into recession... and so it will go on into deeper and deeper energy crises.

I expect we will see new shortages in 2006. This energy crisis is developing gradually, but still I don't think the wider public grasp the "peak" concept. Instead they blame the tax on petrol, or OPEC, or the Russians or whatever. They don't blame their own wasteful lifestyles, which is where it all begins.

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