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Thread: $60 a barrel for oil to arrive in the US soon?

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    Re: $60 a barrel for oil to arrive in the US soon?

    Quote Originally Posted by JP Hochbaum View Post
    You could ask him directly in that blog. Also it says who he is in the blog.
    I don't think he knows what he is talking about.

    He sounds like an energy broker not an oilman.

    And, for all we know the Chinese are squeezing Iran for a lower ppb..... so Iran may not be benefitting.

    Iran has little refinery capacity that's why they IMPORT $6 billion a year in gsoline and the whole country has been on gas rationing since 2007.

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    Re: $60 a barrel for oil to arrive in the US soon?

    Quote Originally Posted by JP Hochbaum View Post
    "What is now happening is the end game: an orchestrated wave of noise that is drawing in speculative money. This is enabling the producers who are actually in the know to hedge by selling production forward during what they confidently expect will be a temporary and pre-planned managed fall in the oil price.

    But the US has been quite happy to let the EU as useful idiots take the economic hit. The high oil prices caused by all this noise and nonsense are actually a net benefit to Iran which rattles its sabre loudly as elections approach.

    The effect of a managed decline in oil prices to, and probably over-correcting well through, $60 a barrel which is coming fairly soon will be extremely beneficial to the US in two ways."

    Chris Cook: The Oil End Game naked capitalism
    Nope, since the production cost of Canadian oil sands is around 60 dollars a barrel.

    This also means that anything over that is speculator/profit extra...
    PeteEU

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    Re: $60 a barrel for oil to arrive in the US soon?

    Quote Originally Posted by MOrion View Post
    OPEC is meeting demand at the current market price. If they were to increase production, it would lower the price of oil, and more would be consumed.
    Do you expect the farmer to grow 15 more acres of corn than there is a market for? What are they supposed to do with all of this extra oil that isn't being used?

    As a cartel, I expect them to restrict production just enough to drive up prices so that they can maximize their profit, without sending prices so high that we are encouraged to switch to alternative sources of energy.
    They are not restricting production.

    And that's exactly what they do.
    No, they are not. Oil is high because it's now not just a commodity but an investment vehicle. If you want to lower the price remove those who are only in it as an investment.

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    Re: $60 a barrel for oil to arrive in the US soon?

    Barring a significant slowdown in global economic growth, the price of oil is unlikely to fall below $60 per barrel this year, much less in the very near term (matter of weeks or months). Global demand for crude oil is currently forecast to increase 0.9% in 2012. The difference between production and consumption is continuing to narrow and forecast to continue to do so. The blogger's opinion that the price of crude oil will fall "well through, $60 a barrel which is coming fairly soon..." represents a fundamental misread of the structural supply-demand dynamics that currently prevail. "Fairly soon" would imply weeks or, at most, a few months for such a development, something that would collide not just with supply-demand dynamics, but also seasonality.

    A price that falls toward $75-$80 later this year would not be unreasonable were a combination of reduced risk premia associated largely with Iran and slower global economic growth to play out, particularly in the fall and beyond. However, the reality that developing economy oil consumption continues to grow faster than efficiency gains/substitution in developed economies should provide a fairly firm floor. Even $75-$80 oil later this year is not assured unless a more significant reduction in global economic growth began to manifest itself. A price below $60, especially "well through" that level is unlikely this year, much less over the next few weeks/months.

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    Re: $60 a barrel for oil to arrive in the US soon?

    Quote Originally Posted by dontworrybehappy View Post
    If you had the slightest clue about anything oil related, you would know that the "big oil fat cats" do not set the price of oil.
    Oh, then it must be all Obama's fault then. I get it.

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    Re: $60 a barrel for oil to arrive in the US soon?

    Quote Originally Posted by 1Perry View Post
    Do you expect the farmer to grow 15 more acres of corn than there is a market for? What are they supposed to do with all of this extra oil that isn't being used?
    Actually, I do expect farmers to grow more than there is a proper market for. As a result of farm subsidies, specifically the Counter Cyclical-Payments, farmers are subsidized when the price of their crops falls below a certain point. So if they can, they have an incentive to overproduce, so that they can make more money from a larger harvest, and also get the subsidy from the gov.

    And this is not a very good analogy to the oil markets, because petroleum is the basis of so many industries. Fuel, plastics, waxes, the chemical industry . . . between all the different uses for petroleum, there is literally an insatiable thirst for oil in the modern world. OPEC need never worry about not finding a customer for as much oil as they want to pump.

    Quote Originally Posted by 1Perry View Post
    They are not restricting production.
    Ever heard of the "excess capacity" maintained by several countries, mostly Saudi Arabia? That is extra pumping capacity that they could bring online, but choose not to. Hence, they are by definition restricting their production.

    Quote Originally Posted by 1Perry View Post
    No, they are not. Oil is high because it's now not just a commodity but an investment vehicle. If you want to lower the price remove those who are only in it as an investment.
    I won't argue that investors and speculators don't influence the price of oil, but on the other hand, I don't think you can say either that it is a bigger influence than the fundamental law of supply and demand.
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    Re: $60 a barrel for oil to arrive in the US soon?

    Quote Originally Posted by MOrion View Post
    Actually, I do expect farmers to grow more than there is a proper market for. As a result of farm subsidies, specifically the Counter Cyclical-Payments, farmers are subsidized when the price of their crops falls below a certain point. So if they can, they have an incentive to overproduce, so that they can make more money from a larger harvest, and also get the subsidy from the gov.
    Which is horrible policy.

    And this is not a very good analogy to the oil markets, because petroleum is the basis of so many industries. Fuel, plastics, waxes, the chemical industry . . . between all the different uses for petroleum, there is literally an insatiable thirst for oil in the modern world. OPEC need never worry about not finding a customer for as much oil as they want to pump.
    As is corn. Maybe I should have used soy beans instead as they are used in many of the same applications as oil?

    Ever heard of the "excess capacity" maintained by several countries, mostly Saudi Arabia? That is extra pumping capacity that they could bring online, but choose not to. Hence, they are by definition restricting their production.
    Wal Mart has the room to add 100 new employee's per store. But this is so stupid to argue that they should pump oil where there is no call for it. This is basic business 101. There is is no business that would do this. None. You produce to meet the demand. The demand is being met. I asked with no answer....What are they supposed to do with all of this excess oil? What difference does it make sitting in a tanker unused or in the ground unused?

    I won't argue that investors and speculators don't influence the price of oil, but on the other hand, I don't think you can say either that it is a bigger influence than the fundamental law of supply and demand.
    One can not make an general statements. Demand is being supplied. As you note, it's being supplied even though there is still more room to supply even more.

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    Re: $60 a barrel for oil to arrive in the US soon?

    Quote Originally Posted by 1Perry View Post
    Which is horrible policy.



    As is corn. Maybe I should have used soy beans instead as they are used in many of the same applications as oil?



    Wal Mart has the room to add 100 new employee's per store. But this is so stupid to argue that they should pump oil where there is no call for it. This is basic business 101. There is is no business that would do this. None. You produce to meet the demand. The demand is being met. I asked with no answer....What are they supposed to do with all of this excess oil? What difference does it make sitting in a tanker unused or in the ground unused?



    One can not make an general statements. Demand is being supplied. As you note, it's being supplied even though there is still more room to supply even more.

    Agricultural subsidy - Wikipedia, the free encyclopedia

    Corn Subsidies** in the United States totaled $77.1 billion from 1995-2010.

    United States Corn Subsidies || EWG Farm Subsidy Database
    Last edited by sharon; 03-06-12 at 09:32 PM.

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    Re: $60 a barrel for oil to arrive in the US soon?

    My blog, where I talk latest news on economics and some other issues.

    http://hereticaldruthers.wordpress.com/

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    Re: $60 a barrel for oil to arrive in the US soon?

    Quote Originally Posted by JP Hochbaum View Post
    "What is now happening is the end game: an orchestrated wave of noise that is drawing in speculative money. This is enabling the producers who are actually in the know to hedge by selling production forward during what they confidently expect will be a temporary and pre-planned managed fall in the oil price.

    But the US has been quite happy to let the EU as useful idiots take the economic hit. The high oil prices caused by all this noise and nonsense are actually a net benefit to Iran which rattles its sabre loudly as elections approach.

    The effect of a managed decline in oil prices to, and probably over-correcting well through, $60 a barrel which is coming fairly soon will be extremely beneficial to the US in two ways."

    Chris Cook: The Oil End Game naked capitalism
    It's not going to happen. Yes, there is still oil in the Earth's crust, but the sweet crude (the easily extracted crude) is mostly gone. What remains is a lot more expensive to obtain. At some point oil is going to run out. It will still be there, but if it takes more energy to extract it than the energy it yields, then it is no longer worth extracting. This condition is called a sink.

    However, I disagree with the doomsayers, who predict a total collapse when the oil runs dry. Cars can run on ammonia. The Belgians did exactly that when the Nazis invaded and took all their oil from them. Ammonia can be extracted from seawater. Yes, it will be much more expensive than oil is now, but it will be less expensive than the future price of oil. And ammonia is decent fertilizer too. Plastics will be made from materials other than oil, and they will be biodegradable. Electricity will no longer be in a national grid, but confined to regions, where transmission line losses will be greatly reduced. The output of factory smokestacks will be used to heat water that drives turbines, which will generate yet more electricity. People will be less wasteful, and all of our manufacturing will be done "smarter", with nothing left to waste.

    Here is the deal - At some point in the future, gasoline is going to reach 20 bucks a gallon. When it does, some companies will collapse, but will be replaced by other companies which will be using new technology to overcome the sparsity of oil. Our life styles will change too, but it will all be for the better. It will also be a good thing that, in being forced to wean ourselves from oil, our carbon footprint on this planet will be drastically reduced, thus alleviating the worst effects of climate change.

    Rather than looking at the year 2050 with fear, we should embrace it, and look forward to this new era of human history with excitement and anticipation. The human race will still be here, despite what the doomsday predictors say, and we as a species will thrive, rather than become extinct.
    Last edited by danarhea; 03-19-12 at 09:51 PM.
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