We cannot drill our way out of this oil crisis. Since 2000, oil companies working in the U.S. have doubled the number of wells drilled per year.
Although increased drilling has added new oil to the nation's supply, it has not done so fast enough to offset the terminal decline of existing fields.
We are going to have to import more of our oil. Period.
Posted: Mon Jun 14, 2004 8:26 pm Post subject: The fly in the ointment - Hedge Funds
Hedge funds, an investment vehicle to protect, (or hedge) against more volatile and risky investments seem to feel oil futures are bullet-proof. These giant investment firms wield enormous power & influence, and employ some of the best analysts anywhere.
Seems the smart money thinks oil is going to get more expensive. So much so they are willing to buy, in massive quantities, oil futures even at todays record price.
IMO this may well be the most convincing argument that a real peak is upon us.
Goggle hedge fund. Not oil hedge fund or whatever, just hedge fund.
How many links related to oil do you see?
Quote:
However, today oil company shares are trading at modest earnings multiples and have been ignored in the market recovery. If the market goes up they should be dragged up too; if the market falls for reasons related to the oil price then oil shares will still go up. Oil is a great hedge fund right now.
LONDON (Reuters) - Pension funds, often among the most cautious of investors, are sizing up oil and other commodities as a permanent way to secure robust returns, helping sustain prices near multi-year highs, analysts say.
Quote:
The record level of fund investment in oil is now formidable so that there is a real danger of a rapid sell-off that could wipe several dollars from the price in a matter of days.
But even if oil prices fall from current highs, funds might see this as an opportunity to reinvest.
"If there's a sell-off, followed by a quick recovery and a new net high, it'll probably go higher," said Craig Reeves, managing director at hedge fund Platinum Capital Management.
"I wouldn't be surprised if you saw $50 a barrel, but that would be speculative and not based on real demand."
http://www.libertyforum.org/showflat.php?Number=1475477 _________________ "We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time." - TS Eliot*
I'm not sure what "the fly in the ointment" means, but it makes sense to me that people are investing in oil futures. This is what economists are talking about...increasing scarcity, supply unable to keep up with demand, those with large holdings a priori will make a killing. Up to a point, I guess, then the risk becomes too much speculation and a "bubble", meaning over-valued commodities, which would burst if supply increased or demand decreased, right?
Fly in the ointment means that the idea that everything is hunky dory is wrong, and major investment brokers investing in energy futures is the "fly" which shows us the truth. Our ointment is nasty, despite cover-ups, and hedge funds are the fly which exposes this reality. _________________ "We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time." - TS Eliot*
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