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Thread: Oil prices plunge 6% for the week

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    Oil prices plunge 6% for the week

    Recent supply numbers, less US consumption in the First quarter, and general world weak economics have finally hit oil.
    That, and general weak market conditions/economic outlook that has depressed stocks the last few days.



    http://money.cnn.com/2012/05/04/markets/oil-prices/
    May 4, 3.26 PM

    NEW YORK (CNNMoney) -- Oil prices have plunged this week, erasing the gains of recent months and dissipating fears of $5-per-gallon gas ... at least for now.

    The price of U.S. crude oil slipped beneath $100 per barrel on Friday, dropping about 4% from Thursday, to settle at $98.49.
    Oil prices are usually a predictor of gasoline prices, which typically mimic the fluctuations in oil, although sometimes not until days or weeks later.

    In reaction to dropping oil prices, gas prices have dropped about 6.5% over the last week, reaching a national average of $3.802 a gallon on Friday, according to the motorist group AAA.

    This knocks the price of oil back down to where it was in early February, which was the last time that oil traded below $100 per barrel before it began its meteoric rise. The price of oil peaked in late February, when it exceeded $109 a barrel.
    Brent crude oil, which comes from the North Sea, has also been declining. Brent fell more than 3% on Friday to $112.20.....
    A note to those who complain about 'speculators'... they can also lose.
    Last edited by mbig; 05-04-12 at 05:32 PM.
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    re: Oil prices plunge 6% for the week

    Quote Originally Posted by mbig View Post
    Recent supply numbers, less US consumption in the First quarter, and general world weak economics have finally hit oil.
    That, and general weak market conditions/economic outlook that has hit stocks the last few days.



    Oil prices plunge 6% for the week - May. 4, 2012
    May 4, 3.26 PM

    A note to those who complain about 'speculators'... they can also lose.
    Great news............

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    re: Oil prices plunge 6% for the week

    I'm sure all the conservatives will be quick to praise President Obama for his lowering of oil prices, given that they blamed him when prices were high.

    Back in reality, however ... could this be any clearer? When the economy is perceived to be doing well oil prices rise. When there's perceived economic weakness oil prices fall. We are certainly better off with a growing economy and elevated oil prices than we are with a tanking economy and low oil prices. Those are the two choices. There is no scenario in which the economy hums along and oil is cheap. Wishing for low oil prices is tantamount to wishing for economic retraction.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    re: Oil prices plunge 6% for the week

    Quote Originally Posted by mbig View Post
    Recent supply numbers, less US consumption in the First quarter, and general world weak economics have finally hit oil.
    That, and general weak market conditions/economic outlook that has depressed stocks the last few days.



    Oil prices plunge 6% for the week - May. 4, 2012
    May 4, 3.26 PM

    A note to those who complain about 'speculators'... they can also lose.
    President Obama has no choice but to take some credit for this trend, whether he wants to or not.
    Last edited by Μολὼν λαβέ; 05-04-12 at 10:46 PM.
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    re: Oil prices plunge 6% for the week

    Quote Originally Posted by mbig View Post
    Recent supply numbers, less US consumption in the First quarter, and general world weak economics have finally hit oil.
    That, and general weak market conditions/economic outlook that has depressed stocks the last few days.



    Oil prices plunge 6% for the week - May. 4, 2012
    May 4, 3.26 PM

    A note to those who complain about 'speculators'... they can also lose.
    And gas will probably drop a penny a day per gallon until the next increase and then it will jump 30-40 cents a gallon in one day.Kind of makes me wish that there was a law that states that if gas can only go down a penny a day then it can only go up a penny a day.
    "A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murder is less to fear"

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    re: Oil prices plunge 6% for the week

    There are other aspects to this as well. A more in depth look will show that "U.S. nonfarm payrolls rose by 115,000 in April, less than the gain of 168,000 expected by economists surveyed by Dow Jones Newswires. The unemployment rate fell a 10th of percentage point to 8.1%, Brent crude, the European benchmark, also is down more than 10% off its high of more than $126 and Spain disclosed that it is officially in a recession, while a survey of economic activity in the euro zone in April found a faster contraction than previously thought."

    "Oil supply, meanwhile, is looking increasingly ample. Saudi Arabia, the world's largest oil exporter, has increased production to 10 million barrels a day in recent months. And oil inventories in the U.S. continue to swell, rising 10% over the last 10 weeks amid weak demand for crude. There's plenty of supply out there, and now you're introducing more and more demand concerns," said Kyle Cooper, managing partner at IAF Energy Advisors. "One hundred dollars a barrel is not cheap, maybe $95 is more realistic."

    Crude Sinks 3.9% to $98.49 a Barrel - WSJ.com

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    re: Oil prices plunge 6% for the week

    Quote Originally Posted by Connery View Post
    There are other aspects to this as well. A more in depth look will show that "U.S. nonfarm payrolls rose by 115,000 in April, less than the gain of 168,000 expected by economists surveyed by Dow Jones Newswires. The unemployment rate fell a 10th of percentage point to 8.1%, Brent crude, the European benchmark, also is down more than 10% off its high of more than $126 and Spain disclosed that it is officially in a recession, while a survey of economic activity in the euro zone in April found a faster contraction than previously thought."

    "Oil supply, meanwhile, is looking increasingly ample. Saudi Arabia, the world's largest oil exporter, has increased production to 10 million barrels a day in recent months. And oil inventories in the U.S. continue to swell, rising 10% over the last 10 weeks amid weak demand for crude. There's plenty of supply out there, and now you're introducing more and more demand concerns," said Kyle Cooper, managing partner at IAF Energy Advisors. "One hundred dollars a barrel is not cheap, maybe $95 is more realistic."

    Crude Sinks 3.9% to $98.49 a Barrel - WSJ.com
    I think it also has to do with the ratchteting down of the Iranian nuclear situation -- with several prominent Israelis coming out in recent days and saying that it would be stupid for Israel to take unilateral action.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    re: Oil prices plunge 6% for the week

    Quote Originally Posted by AdamT View Post
    I think it also has to do with the ratchteting down of the Iranian nuclear situation -- with several prominent Israelis coming out in recent days and saying that it would be stupid for Israel to take unilateral action.
    There has been an 'Iran Premium' in oil for a few years now. Not just because of speculating there will be trouble, but not allowing speculation on the other side. It is/was perilous to short $100 oil to make $20 but maybe lose $100 if hostilities broke.

    Beside the disappointing numbers on employment, you have both the Greek and French elections Sunday.
    The more socialist candidate, Hollande, ahead by 6% in France perhaps threatening Austerity there; and if Greece moves Left, their debt deal could be blown.
    So you had the Dow down 168 today after losing yesterday as well.
    Nervous liquidation on all fronts and in other commodities too.
    About the only thing up today was Gold and US T-bills/bonds on that fear.
    Last edited by mbig; 05-05-12 at 01:44 AM.
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    re: Oil prices plunge 6% for the week

    The story should have read "After several months of oil companies gouging customers, the yearly ass reaming has ended, but just wait until next year."
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    re: Oil prices plunge 6% for the week

    Quote Originally Posted by mbig View Post
    A note to those who complain about 'speculators'... they can also lose.
    They can, they do and they will continue to, if they hold on to previous gains. The way I see it, a break of 95 brings 92/93 into focus with nothing between it and the optimal 45-degree angle target taken from the last major trend break in the opposite direction. Here's a two year Daily Chart of NYMEX Crude:

    ScreenHunter_16 May. 04 22.14.jpg

    Any descent of ascent greater than 45-degrees (mine is an irregular 45-degree plot and not exact) is unsustainable in a market with nominal or standard volatility. So, just like the previous greater than 45-degree bull run got covered to the upside, so to will any greater than 45-degree bear run - which is what the market is exhibiting right now with this close near the 98 level.

    If the market stays true to form, according to my analysis, you could be looking at a 78 to 76 NYMEX Crude price level, in under 1.5 years. Something the "experts" were saying would be simply impossible just 2 years ago.

    Purple intersection of blue horizontal (previous bearish break of non-optimal 45-degree descent) and blue lateral (optimal 45-degree angle of ascent return to bullish market) lines, indicate a mode price (Bear Target) of near the 86 level.

    Either way it goes, oil is setting up a nice big neutral triangle over the next year or so. After that, expect wildly high volatility and price action on a daily basis, until the next major trend is established.

    Keep in mind that Crude could also be in a double-top (C to D) phase of a Harmonic Pattern. The CD phase of the standard Harmonic, is typically the 2nd strongest leg of the pattern. This Harmonic looks like larger Bullish Pattern, but the size and scope of the Harmonic will establish the Bearish CD leg, first. Depending on the extend of the CD leg, the D to Projection leg will commence, but only if the Harmonic pattern holds. Given that it is falling into a larger neutral Triangle pattern at the same time, the probability of the Bullish Harmonic completing its full cycle is rather low.

    Translation = Expect to see Stable to Falling Prices at the pump in the near term. But, don't expect Airlines to do you a favor by lowering airfares due to lower Jet-A prices. They have a lot of shortfall to recover from 2001/2002, and they have no intention of giving that money back to consumers any time soon.
    Last edited by PW4000; 05-05-12 at 02:43 AM.

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