Complete and utter bullshit: oil prices....

[kalian]

http://www.financialsense.com/editorials/bronson/2004/0423.html

Look at these graphs and look what their projections are...
Long-term, they're claiming that oil might go all the way down to
10 (TEN!) bucks a barrel.
Gasoline...back to a buck a gallon. :crazy: Just plain bullshit.
Who the hell are they trying to kid here?

One: the dollar continues to tank and most likely, OPEC and gang will
start taking Euros instead of dollars for their oil.
Two: there's massive instability in the ME and there are NO SIGNS
that things will get any better anytime soon.
Three: I don't know where the hell they can get 140 (!) years of
oil cycles...considering that oil was not an important source of
energy until around 1890...until the introduction of the automobile
in the 1910's... This "cycle" is just too weird. And to be honest...
there is no visible "cycle" there on which to base any future
projections.

Either way...totally insane. :crazy:

[Frodo]

1. Hmmmm.

One: The dollar has not been "tanking" lately. We're four months into the year and the dollar index is almost to where it was last June. The dollar is weak (though improving), but when you are trading spot on your 200 day moving average you can't accurately be described as "tanking".

Two: Sure there's "massive instability in the ME" and no signs it will get better any time soon. Of course, that statement could accurately have been made for quite a few years now - even when gas was cheap.

Three: I agree.

Four (and most importantly) - Just like diamonds, the price of oil is controlled by a cartell, NOT purely by market forces. If they WANT gas to get cheaper later this year it WILL be cheaper.

[kalian]

3. OK....

On 1: maybe the word "tanking" might have been too harsh but
there is no disagreement that some sort of monetary displacement
is occuring within the international economic community.

On 2: yes, in the past, prior to shrub's crusade into the ME, that
"instability" was relegated to the Palestinian/Israeli issue.
Personally, I don't think that there was anything going on during the
past 15 years that would warrant the title of "instability". Now,
the tables have definitely been turned.

On 4: yes, the oil market can be manipulated to some degree but I
also believe that we are entering a phase where supply/demand WILL
start to make a difference when it comes to the final price. There
is only so much that a cartel can do when it comes to a finite
resource.

[54anickel]

4. Actually, the dollar index is back to where it was last November

and the current long-term trend and technicals point downward.

http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=d12

[Frodo]

6. Both are correct. It's all in the spin.

The dollar index IS about where it was in November, but it's also "almost to where it was last June" (specifically about a point or a point and a half below).

It's also true to say that it just hit the 200 day moving average, which is not a small accomplishment in an index that had been falling so dramatically.

It's kind of tough to talk about the "current" "long term" trend. The "long term" trend has clearly been downward and the "current" trend is clearly upward. Combine the two and you're back to the 50/50 argument.

But allow me to draw your attention to that lovely "double bottom" in Jan/Feb and the expected rate increases here while the Euro zone discusses rate decreases on far weaker economies. If the 1stQ GDP come in anywhere near 5%, we're talking about an average over the last year (5.1%) higher than any calendar-year (the only data I have) since 1984 and the highest net (GDP growth - inflation) since JFK (again - just going on rough annual tables and comparing it to a 2Q-1Q average). There really isn't anyone in Europe doing as well (and take a look at THEIR unemployment numbers) and that has to filter down to the current eventually.

[54anickel]

7. Are you saying you believe the dollar has bottomed and will continue

to go up?

[Frodo]

8. I don't think I'm ready to make that call yet - but we'll know soon.

There are a couple areas of resistance that would have to be tested first, and we'll need to see continued good econ numbers over the next quarter or so...

But yes, I think the chances are somewhat better than 50/50 that (not against a particular currency so much as overall) we've seen the bottom.

[54anickel]

9. That would give legs to the idea that "deficits don't matter". n/t

[Frodo]

11. Not exactly.

It would give legs to the FACT that currency valuation is a function of RELETIVE strength and that the other nations have pretty substantial deficits as well. And with far worse unemployment and growth prospects - it would really be a recognition that "the other guy's problems matter too"

It would also be a recognition of the fact that things don't go up or down forever. If a particular company annouces that they are going to miss profit expectations due to debt problems their stock will fall... but after it has falled for awhile and is now WELL below it's previous levels you can't say that an analyst predicting a rise is ignoring their debt annoucement.

[54anickel]

10. Current long term trend - my bad, poor choice of words. What I meant was

the "current view" held by the Forex traders is the continuation of the long-term trend down. They are calling for a short-term rally on the speculation of rising interest rates.

[kalian]

2. A follow-up article....

headline:
Greenspan: high oil prices here to stay

http://money.cnn.com/2004/04/27/news/economy/greenspan.reut/index.htm?cnn=yes

One major :wtf:

[rapier]

5. notes

Your applying fundamental analysis and this guy is using technical analylsis. Well maybe he is.

Actually I see nothing on his chart that bears much resembelence to ordinary tech analysis and the use of 'inflation adjusted' or constant dollar charts muddies the waters further.

Just remember that anything is possible. Even lower oil prices. Maybe there will be a worldwide depression. That would bring prices down. Maybe we will nuke everyone else and have it all to ourselves. Could happen. Myabe we will send a million troops to the ME and just take their damn oil. $20 oil for us, $100 for everyone else. Now that would solve a lot of our competitiveness problems and be putting our power to good use. I'm sure God would sanction either of those. Maybe there will be some sort of technoligial miracle like who knows what, cold fusion perhaps, which renders oil far less important. Or maybe oil goes to $100/bbl. Who knows?

[amazona]

12. the oil industry is older than you realize

No problem getting oil prices back to 1863. Here is a page on George Washington's speculation on an oilfield in 1771:

http://little-mountain.com/oilandgasmuseum/

Oil sold for $30 a barrel in 1860 by this web page, and that was when $30 was real money, more than a person like you or I would earn in a month. But there have always been rich people who needed their houses heated. Drive through the Deep South and on up into the NorthEast sometime -- the small towns, the forgotten places -- and you will be astounded just how many fine old homes full of wealthy people there used to be in those days. And they weren't shivering by the fire like our pioneer families!

As far as will oil hit $10 a barrel again, sometimes I believe the only thing I know about oil and gas is that you just can't predict the price. No one predicted that prices would go so low, for so long, starting in the early/mid 1980s. People trained for a lifetime career (and I was one of them) only to find that our oil wasn't worth anything and oil companies had to consolidate and shut down whole office buildings -- which is actually still happening. Ask the city of New Orleans about the impact of two decades of unexpectedly low oil prices.

As far as "oil will do this because my chart says so," well, this is just a superstition and I will even agree with your word -- it's bullshit. Oil prices will do what oil prices will do. No one can predict them. If only we could. It would make planning for our future a lot easier. Certainly the low oil prices of the later 80s and 1990s kicked the guts out of the conservation and alternative energy movements to a very significant degree. I am not going to the hassle of putting solar panels on my roof to lose money, I'm not that big of a hero.

[German-Lefty]

13. I'd like to get paid in "inflation adjusted" dollars :-)

Those graphs are silly. Gas cost $3 a gallon in the 80s (inflation adjusted).

Never take investment advice from someone betting on what you'll do. Or better yet never take investment advice.

[Frodo]

14. But wait! I...um...if I....but you said...oh dear...

Never take investment advice from someone betting on what you'll do. Or better yet never take investment advice.

I'm having trouble processing that advice. :-)