Headlines like the one screaming the oil crash has caused losses to date of about $1.3 trillion, should be ignored by those that weren't affected by the disaster, as it has brought about opportunities rarely seen in one's investing lifetime.
The demand for oil is never going to go away, and the price it is now at won't remain at that low level for a long period of time. Producers will simply cut back until the price starts to rise to a level that is profitable to them. That of course has already happened, and it will take time until the effect of it works its way through the market.
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Showing posts with label Oil Prices Going Up. Show all posts
Showing posts with label Oil Prices Going Up. Show all posts
Thursday, August 6, 2015
Monday, September 17, 2012
Will Oil Trigger Next Recession?
I was confident that the Fed had already begun printing. That seemed quite evident by the overall action in the commodity markets, the dollar, and the fact that stocks were unable to correct in the normal timing band for a daily cycle low. However, I didn’t really expect Ben would come out and publicly admit it. That one took me by surprise Thursday. I guess Bernanke wants to get full value for his attack on the dollar and make sure that markets are rising into the election.
At this point all the pieces are in place for the inflationary spike and currency crisis I’ve been predicting for 2014. We now have open ended QE that is tied to economic output and unemployment. But since debasing currencies has historically never been the cure for the bursting of a credit bubble, all the Fed is going to produce is spiraling inflation. So as this progresses we are going to see the Fed printing faster and faster as the result they are looking for never materializes. This is what will ultimately drive the currency crisis at the dollar’s next three year cycle low in 2014.
At this point, watch the price of oil if you want to know when the next recession is going to begin. As I’ve pointed out many times in the past, recessions (well, at least since World War II) have all been preceded by a sharp spike in the price of energy. Any move of 100% or more in a year or less, has historically been the straw that breaks the camel's back. Modern economies cannot survive that kind of shock. It invariably triggers the collapse of consumer discretionary spending and economic activity comes to a grinding halt.
In 2007 oil surged out of the 3 year cycle low into a parabolic advance as Bernanke trashed the dollar in the vain attempt to halt the sub-prime collapse. That 200% spike in oil is what tipped the economy over into recession, which was then magnified in the fall of `08 as the financial bubble and debt markets imploded.
I think it’s safe to say that Bernanke doesn’t understand his role in causing the recession of 08/09 as he is now making the same mistake again. I think he believes the recession was solely triggered by the financial meltdown. That was the icing on the cake, but not the initial trigger that caused the recession.
Despite the complete inability of QE to heal the economy or job market, and since he really has no other tool, Bernanke just keeps doing the same thing over and over expecting a different result, but never getting it.
Commodities are the check that prevents Keynesian economic policies from healing the global economy. Keynesian academics either don’t understand this, or refuse to acknowledge it. Until they do, or we install Austrian economic advisers in the government, we are destined to continue making the same mistakes over and over.
So we will watch the price of oil as it rises out of its three year cycle low. If it hits $160 by next summer that will probably be enough to start the economy on the next downward spiral. If politicians get involved (and I’m sure they will) and try to impose price controls, they will multiply the damage and probably guarantee that the next economic downturn escalates into a truly catastrophic depression.
Until we see the spike in oil and the corresponding damage to the economy, no one has any business try to short anything, well maybe bonds, but even that will be risky because the Fed is going to be actively trying to prop the bond market up and keep interest rates artificially low.
All in all there is going to be so much money to be made on the long side, especially in precious metals, that no one needs to fool around with puny little gains on the short side, especially in a market that is going to be hell to trade from the short side. The time to sell short will be in 2014 after the dollar’s next three year cycle low. The dollar’s rally out of that bottom will correspond with the next global economic collapse, ultimately caused by the decisions made by the ECB and the Fed this past week. I dare say if they could see the damage their decisions are going to inflict upon the world and the dire unintended consequences, maybe they would finally stop kicking the can down the road and let the economy heal naturally. Of course that would entail several years of severe pain and politicians, as we all know, are extremely allergic to that.
2014-2015 is when we are going to see the stock market drop 60-75% and the next great leg down in this secular bear market. But until then there’s probably a pretty good chance we are going to see the S&P at new all time-highs in the next 6 months – 12 months.
Source
At this point all the pieces are in place for the inflationary spike and currency crisis I’ve been predicting for 2014. We now have open ended QE that is tied to economic output and unemployment. But since debasing currencies has historically never been the cure for the bursting of a credit bubble, all the Fed is going to produce is spiraling inflation. So as this progresses we are going to see the Fed printing faster and faster as the result they are looking for never materializes. This is what will ultimately drive the currency crisis at the dollar’s next three year cycle low in 2014.
At this point, watch the price of oil if you want to know when the next recession is going to begin. As I’ve pointed out many times in the past, recessions (well, at least since World War II) have all been preceded by a sharp spike in the price of energy. Any move of 100% or more in a year or less, has historically been the straw that breaks the camel's back. Modern economies cannot survive that kind of shock. It invariably triggers the collapse of consumer discretionary spending and economic activity comes to a grinding halt.
In 2007 oil surged out of the 3 year cycle low into a parabolic advance as Bernanke trashed the dollar in the vain attempt to halt the sub-prime collapse. That 200% spike in oil is what tipped the economy over into recession, which was then magnified in the fall of `08 as the financial bubble and debt markets imploded.
I think it’s safe to say that Bernanke doesn’t understand his role in causing the recession of 08/09 as he is now making the same mistake again. I think he believes the recession was solely triggered by the financial meltdown. That was the icing on the cake, but not the initial trigger that caused the recession.
Despite the complete inability of QE to heal the economy or job market, and since he really has no other tool, Bernanke just keeps doing the same thing over and over expecting a different result, but never getting it.
Commodities are the check that prevents Keynesian economic policies from healing the global economy. Keynesian academics either don’t understand this, or refuse to acknowledge it. Until they do, or we install Austrian economic advisers in the government, we are destined to continue making the same mistakes over and over.
So we will watch the price of oil as it rises out of its three year cycle low. If it hits $160 by next summer that will probably be enough to start the economy on the next downward spiral. If politicians get involved (and I’m sure they will) and try to impose price controls, they will multiply the damage and probably guarantee that the next economic downturn escalates into a truly catastrophic depression.
Until we see the spike in oil and the corresponding damage to the economy, no one has any business try to short anything, well maybe bonds, but even that will be risky because the Fed is going to be actively trying to prop the bond market up and keep interest rates artificially low.
All in all there is going to be so much money to be made on the long side, especially in precious metals, that no one needs to fool around with puny little gains on the short side, especially in a market that is going to be hell to trade from the short side. The time to sell short will be in 2014 after the dollar’s next three year cycle low. The dollar’s rally out of that bottom will correspond with the next global economic collapse, ultimately caused by the decisions made by the ECB and the Fed this past week. I dare say if they could see the damage their decisions are going to inflict upon the world and the dire unintended consequences, maybe they would finally stop kicking the can down the road and let the economy heal naturally. Of course that would entail several years of severe pain and politicians, as we all know, are extremely allergic to that.
2014-2015 is when we are going to see the stock market drop 60-75% and the next great leg down in this secular bear market. But until then there’s probably a pretty good chance we are going to see the S&P at new all time-highs in the next 6 months – 12 months.
Source
Thursday, May 26, 2011
Exxon (XOM) (COP) (CVX) Close Up as Oil Breaks $100 a Barrel
For the first day this week oil prices broke the $100 mark a barrel, sending the share prices of energy giants Exxon Mobil (NYSE:XOM), Conoco (NYSE:COP) and Chevron (NYSE:CVX) up by the end of the session.
Light sweet crude oil for July delivery jumped $1.73 to settle at $101.32 a barrel and July Brent crude climbed by $2.40 to settle at $114.93.
Also strengthening oil prices was a report from the Department of Energy on Wednesday saying U.S. commercial crude inventories rose by 600,000 barrels in the week ended May 20 against an expected 1.3 million barrel fall in crude stocks.
Gasoline inventories was up by 3.8 million barrels last week against an estimated 300,000 barrel jump.
Chevron closed at $103.25, gaining $0.98, or 0.96 percent. Exxon closed at $81.96, up $0.67, or 0.82 percent. ConocoPhillips ended the session up slightly at $71.97, rising $0.06, or 0.08 percent.
Light sweet crude oil for July delivery jumped $1.73 to settle at $101.32 a barrel and July Brent crude climbed by $2.40 to settle at $114.93.
Also strengthening oil prices was a report from the Department of Energy on Wednesday saying U.S. commercial crude inventories rose by 600,000 barrels in the week ended May 20 against an expected 1.3 million barrel fall in crude stocks.
Gasoline inventories was up by 3.8 million barrels last week against an estimated 300,000 barrel jump.
Chevron closed at $103.25, gaining $0.98, or 0.96 percent. Exxon closed at $81.96, up $0.67, or 0.82 percent. ConocoPhillips ended the session up slightly at $71.97, rising $0.06, or 0.08 percent.
Friday, October 15, 2010
JPMorgan (NYSE:JPM) Reiterates "Overweight" Rating on BP (NYSE:BP)
Citing oil demand and resultant higher prices, JPMorgan (NYSE:JPM) said they're maintaining their "Overweight" rating on BP Plc (NYSE:BP).
With the demand for oil surprising many, the higher prices from the demand is good news for BP and others in the industry.
Barclays (NYSE:BCS) also see oil prices rising, with oil companies benefiting from it, and those invested in them.
The IEA Monthly Oil Market report revealed the IEA has upwardly revised their oil demand numbers in the short term by about 110 thousand b/d to 1.73 m b/d.
Shares of BP fell slightly to $41.02, dropping $0.39, or 0.94 percent.
With the demand for oil surprising many, the higher prices from the demand is good news for BP and others in the industry.
Barclays (NYSE:BCS) also see oil prices rising, with oil companies benefiting from it, and those invested in them.
The IEA Monthly Oil Market report revealed the IEA has upwardly revised their oil demand numbers in the short term by about 110 thousand b/d to 1.73 m b/d.
Shares of BP fell slightly to $41.02, dropping $0.39, or 0.94 percent.
Friday, September 3, 2010
Mariner (NYSE:ME) Rig Fire Pushes Oil Prices Up
Reports of an explosion and fire on a Gulf oil rig operated by Mariner Energy (NYSE:ME) helped push the price of oil futures past the $75 a barrel mark by the end of Thursday's session.
On the New York Mercantile Exchange, crude for October delivery increased $1.11, to $75.02 a barrel.
As usual this was an emotional response, as the rig was a production rig and not a exploration and drilling rig like the Deepwater Horizon connected to BP's (NYSE:BP) oil spill.
Production rigs collect oil and gas from remote wells, process it, and then transport it through a pipeline to shore.
These types of incidents are very common on rigs, and happen around the world and in the Gulf very frequently. Over 130 were reported in 2009 alone, and that was just those counted in the Gulf.
Either way, oil prices went up more because of the lack of information and media frenzy, rather than anything based on the circumstances surrounding the rig fire.
On the New York Mercantile Exchange, crude for October delivery increased $1.11, to $75.02 a barrel.
As usual this was an emotional response, as the rig was a production rig and not a exploration and drilling rig like the Deepwater Horizon connected to BP's (NYSE:BP) oil spill.
Production rigs collect oil and gas from remote wells, process it, and then transport it through a pipeline to shore.
These types of incidents are very common on rigs, and happen around the world and in the Gulf very frequently. Over 130 were reported in 2009 alone, and that was just those counted in the Gulf.
Either way, oil prices went up more because of the lack of information and media frenzy, rather than anything based on the circumstances surrounding the rig fire.
Tuesday, August 31, 2010
Nordea Bank Sees $100 Oil
A report from Nordea Bank AB said they see oil reaching $100 a barrel by 2012, based on their belief there will be an economic recovery and growth in 2011.
Estimates for the company have oil prices averaging $79 a barrel in the fourth quarter of 2010, increasing to $85.75 in 2011, and to average $102.50 in 2012.
Nordea analyst Thina Saltvedt, said in the report, "In the short term, there is a risk that prices may fall below the underlying trend as fears of a new recession in the U.S. may intensify and weigh on risk appetite. In the medium term, oil prices may surprise on the upside if the rebound in the world economy and the demand for oil is stronger and the increase is more rapid than expected."
Nordea also feels the extra oil capacity of OPEC will drop near the end of 2011, and at that time they believe economic growth will be starting to take off, driving oil prices up.
At that time they also think major oil fields will have pressure upon them to develop even quicker in response to increased demand.
Estimates for the company have oil prices averaging $79 a barrel in the fourth quarter of 2010, increasing to $85.75 in 2011, and to average $102.50 in 2012.
Nordea analyst Thina Saltvedt, said in the report, "In the short term, there is a risk that prices may fall below the underlying trend as fears of a new recession in the U.S. may intensify and weigh on risk appetite. In the medium term, oil prices may surprise on the upside if the rebound in the world economy and the demand for oil is stronger and the increase is more rapid than expected."
Nordea also feels the extra oil capacity of OPEC will drop near the end of 2011, and at that time they believe economic growth will be starting to take off, driving oil prices up.
At that time they also think major oil fields will have pressure upon them to develop even quicker in response to increased demand.
Monday, June 28, 2010
Peter Schiff Bullish on Precious Metals, Oil
Peter Schiff stated recently that while he is heavily invested in gold, he is also bullish on other precious metals, and oil as well.
Specific metals identified by Schiff were platinum and silver, although he added he is also bullish on some industrial metals too.
The Gulf oil accident with BP (NYSP:BP) is particularly noteworthy in Schiff's estimate of oil in general, and he said the costs of offshore drilling will skyrocket, including insurance.
There will also be less oil because of the moratorium in the Gulf, which will decrease production if that isn't changed.
Demand for oil from China is a factor as well. So combining what appears to be increased demand and lower supply, and there is nowhere for oil prices to go but up, in Schiff's view.
Specific metals identified by Schiff were platinum and silver, although he added he is also bullish on some industrial metals too.
The Gulf oil accident with BP (NYSP:BP) is particularly noteworthy in Schiff's estimate of oil in general, and he said the costs of offshore drilling will skyrocket, including insurance.
There will also be less oil because of the moratorium in the Gulf, which will decrease production if that isn't changed.
Demand for oil from China is a factor as well. So combining what appears to be increased demand and lower supply, and there is nowhere for oil prices to go but up, in Schiff's view.
Friday, June 11, 2010
Peter Schiff on Oil Prices
In a recent interview, Peter Schiff said he believes the only reason oil prices haven't skyrocketed is concerns by people around the world over the potential fallout from the sovereign debt crisis in Europe, which could spread far beyond the continent to infect the world.
When you take the time the year it is, the usual high-priced gas and oil summer season, the moratorium by Obama in the Gulf, and the Gulf disaster itself, and you have the elements of extraordinary oil and gasoline prices, which haven't emerged.
Schiff stated, “Oil prices Should be going through the roof right now. The only reason they’re not is because of the broad-based sell-off around the world in equities, commodities, and other currencies due to the fear of contagion in Europe. This is trumping the very very bullish news for oil. But once we hit a bottom, I think we’re gonna see a huge increase in the price of oil.”
When you take the time the year it is, the usual high-priced gas and oil summer season, the moratorium by Obama in the Gulf, and the Gulf disaster itself, and you have the elements of extraordinary oil and gasoline prices, which haven't emerged.
Schiff stated, “Oil prices Should be going through the roof right now. The only reason they’re not is because of the broad-based sell-off around the world in equities, commodities, and other currencies due to the fear of contagion in Europe. This is trumping the very very bullish news for oil. But once we hit a bottom, I think we’re gonna see a huge increase in the price of oil.”
Thursday, April 15, 2010
OPEC May Increase Production if Oil Prices Go Over $100 a Barrel
OPEC May Increase Oil Production if Prices Go Over $100 a Barrel
OPEC will change its production levels if the price of oil goes above $100 a barrel, said Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah today.
Even so, Sheikh Ahmad that considerations would have to be taken into account concerning supply and demand when making decisions.
For now, oil prices at about $85 a barrel are considered a good price by OPEC, and that isn't anticipated to change much, although some think it'll go much higher as the summer period comes.
I don't think so though, as the so-called recovery isn't really one, as data continues to come out showing increased loss of jobs and foreclosures.
That will keep oil demand from rising, along with oil prices.
OPEC will change its production levels if the price of oil goes above $100 a barrel, said Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah today.
Even so, Sheikh Ahmad that considerations would have to be taken into account concerning supply and demand when making decisions.
For now, oil prices at about $85 a barrel are considered a good price by OPEC, and that isn't anticipated to change much, although some think it'll go much higher as the summer period comes.
I don't think so though, as the so-called recovery isn't really one, as data continues to come out showing increased loss of jobs and foreclosures.
That will keep oil demand from rising, along with oil prices.
Monday, April 5, 2010
Goldman Sachs (NYSE:GS) Oil Nearing $100
Oil Prices Going Up
Goldman Sachs (NYSE:GS) has stated they believe oil prices will increase to the $92 to $97 range in the next six months, and even possibly reach it in the next 90 days.
The reasoning behind the assertion is their belief demand will pick up to the place of supply not being able to meet it.
Bank of America thinks it'll get worse than that, with prices getting as high as $110 for oil, and possibly even going as high a $150 before the end of the year.
The only caveat I have with that is if people are really ready to open their wallets and start traveling in a way that would generate that type of demand. We'll see in a couple of months.
Oil Prices Going Up
Goldman Sachs (NYSE:GS) has stated they believe oil prices will increase to the $92 to $97 range in the next six months, and even possibly reach it in the next 90 days.
The reasoning behind the assertion is their belief demand will pick up to the place of supply not being able to meet it.
Bank of America thinks it'll get worse than that, with prices getting as high as $110 for oil, and possibly even going as high a $150 before the end of the year.
The only caveat I have with that is if people are really ready to open their wallets and start traveling in a way that would generate that type of demand. We'll see in a couple of months.
Oil Prices Going Up
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