Posted: Thu Mar 20, 2008 8:29 am Post subject: Re: Matt Simmons: Speculators set oil prices
DantesPeak wrote:
Your thread title is misleading.
What are you talking about?
Here's the direct quote, in his own words:
Matt Simmons wrote:
Effectively, the changing perceptions of a small handful of speculators now appear to set the price for West Texas Intermediate crude oil, which is turn sets the general price for almost all other crude grades throughout the world.
What, do you think the influence of speculators and hedge funds has lessened since then? You're nuts. A tidal wave of hedge fund and pension money has flowed into the NYMEX since Simmons wrote that. Are you in denial about that? _________________ A periscope up every ass!
Posted: Thu Mar 20, 2008 8:29 am Post subject: Re: Matt Simmons: Speculators set oil prices
DantesPeak wrote:
Simmons is not know for predicting short term moves in the price of oil any more than you are.
Are you KIDDING? He's the guy who was claiming $200 oil and $40 natural gas back in 2005. And kept doing it in one form or fashion for nearly every summer since.
While the first time its amusing, after awhile it just looks silly. _________________ Freddy RULZ!
www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits) (or bankers) (or web "experts")
Joined: Oct 23, 2004 Posts: 5905 Location: New Jersey
Posted: Thu Mar 20, 2008 8:36 am Post subject: Re: Matt Simmons: Speculators set oil prices
KillTheHumans wrote:
DantesPeak wrote:
Simmons is not know for predicting short term moves in the price of oil any more than you are.
Are you KIDDING? He's the guy who was claiming $200 oil and $40 natural gas back in 2005. And kept doing it in one form or fashion for nearly every summer since.
While the first time its amusing, after awhile it just looks silly.
Show me where he says that is a short term predcition and not a long term one.
Actually, I like the underlying inferences in this thread.
Speculation....hmmmm......now anyone care to tell me what that involves....for example, the real estate speculative bubble was based on a mix of cheap money and speculation that housing as an asset class would be growing in value for ever more.
What do we think of the underlying variable driving oil price speculation and are there gaping holes in any of those notions (as there was in the housing market if anyone with half a brain cared to consider). _________________ Bugger me, I hear oil's runnin out mate!
Posted: Thu Mar 20, 2008 6:27 pm Post subject: Re: Matt Simmons: Speculators set oil prices
DantesPeak wrote:
Show me where he says that is a short term predcition and not a long term one.
Reuters 0ct. 19, 2005
OTTAWA - Consumers should brace for crude oil and natural gas prices
possibly doubling or tripling this winter, Matthew Simmons, a
best-selling author and oil-supply bear, said on Wednesday.
"Prices are really cheap today and they need to go a lot higher, and
they probably will go a lot higher," Simmons said in Ottawa.
"I am very concerned, given the destructive damage done by (Hurricanes)
Katrina and Rita, that the United States must be closer to starting to
see significant product shortages than we've seen since 1979."
Too much got destroyed and too little has been brought back on stream,
the Houston-based analyst said.
He also said that cold weather this winter could bring a very high risk
of natural gas curtailment in the United States.
"Either one of those events (oil product shortage or natural gas
shortage) could send prices two to three times higher than they are
today," he said after a speech in Ottawa.
That could translate into natural gas prices of $40 per million British
thermal units from more than $13 now, he said. Doubling or tripling
crude would put it in the range of $125 to $190 per barrel.
Thanks to JD for keeping the text because MSNBC doesn't carry the page that long.
From an October prediction to THAT winter, I'd call that short term. Whats really funny is during one of his periods of hysteria the price actually dropped into the $50's instead. Oops. The winter in question, natural gas prices came down quite low as well. More oops. But maybe...if he keeps guessing....year after year...at the very least regular old inflation will make certain he's right!! _________________ Freddy RULZ!
www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits) (or bankers) (or web "experts")
Joined: Oct 23, 2004 Posts: 5905 Location: New Jersey
Posted: Thu Mar 20, 2008 8:49 pm Post subject: Re: Matt Simmons: Speculators set oil prices
KillTheHumans wrote:
DantesPeak wrote:
Show me where he says that is a short term predcition and not a long term one.
Reuters 0ct. 19, 2005
OTTAWA - Consumers should brace for crude oil and natural gas prices
possibly doubling or tripling this winter, Matthew Simmons, a
best-selling author and oil-supply bear, said on Wednesday.
"Prices are really cheap today and they need to go a lot higher, and
they probably will go a lot higher," Simmons said in Ottawa.
"I am very concerned, given the destructive damage done by (Hurricanes)
Katrina and Rita, that the United States must be closer to starting to
see significant product shortages than we've seen since 1979."
Too much got destroyed and too little has been brought back on stream,
the Houston-based analyst said.
He also said that cold weather this winter could bring a very high risk
of natural gas curtailment in the United States.
"Either one of those events (oil product shortage or natural gas
shortage) could send prices two to three times higher than they are
today," he said after a speech in Ottawa.
That could translate into natural gas prices of $40 per million British
thermal units from more than $13 now, he said. Doubling or tripling
crude would put it in the range of $125 to $190 per barrel.
Thanks to JD for keeping the text because MSNBC doesn't carry the page that long.
From an October prediction to THAT winter, I'd call that short term. Whats really funny is during one of his periods of hysteria the price actually dropped into the $50's instead. Oops. The winter in question, natural gas prices came down quite low as well. More oops. But maybe...if he keeps guessing....year after year...at the very least regular old inflation will make certain he's right!!
I’ve asked the same question here at PO.com many many times, and the best that naysayers can come up with this one iffy prediction form Simmons that he made.
We've had this discussion here before and granted that he did state in 2005 and 2006 if we had a cold winter in the US, we could have $100 oil - which is what I call a qualified prediction.
Actually it was a rather good prediction for natural gas, as it did temporary pass $40 in the NYC area that winter.
Posted: Thu Mar 20, 2008 9:16 pm Post subject: Re: Matt Simmons: Speculators set oil prices
DantesPeak wrote:
Actually it was a rather good prediction for natural gas, as it did temporary pass $40 in the NYC area that winter.
Really? Well, interestingly enough, short term spot market prices, like say the 5 minute electricity calls by grid managers, are quite a bit more volatile than usual month over month spot market prices.
So, here's what producers are paid for their natural gas going back a few years....
and notice, the month Simmons made his prediction is the highest month in recent memory...it FELL after his prediction, never made it back to those levels in ANY winter since then, let alone whatever multiple he was being hysterical about at the time. You would think his predictions would at least last out given month, wouldn't you?
The guys a shill, he ALWAYS thinks the price will increase, has a track record going back into the 90's saying the same stuff. Buy my IPO!! Pension funds don't have enough oilfield services stocks! It could be a tough winter! Buy! Buy! Buy! And his business? Why...sell! sell! sell!..... of course.... _________________ Freddy RULZ!
www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits) (or bankers) (or web "experts")
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Fri Mar 21, 2008 7:01 am Post subject: Re: Matt Simmons: Speculators set oil prices
KTH/RGR,
Now you're exagerating. You're disdain of Simmons is well known. However, as for pumping his company stock? If one can buy stock in Simmons and Company or whatever his firm name is, that would be news to me. I've never believed he was "pumping" his own stock. He seems to be pumping a message that he believes in. Whether he is right is unknown at this time.
Further, back in the 90s, Simmons clearly stated his belief that speculators could pump up the prices of oil. So, on that point you and he would agree. My question would be, for how long? Surely, on a day to day basis I can see the argument, but for the last 7 years? It seems very reasonable speculators could inflate a trend, but not create a trend. Cramer even talked about pumping stocks but on a daily basis, not over any course of time.
Posted: Fri Mar 21, 2008 8:24 am Post subject: Re: Matt Simmons: Speculators set oil prices
seahorse wrote:
KTH
Now you're exagerating. You're disdain of Simmons is well known. However, as for pumping his company stock? If one can buy stock in Simmons and Company or whatever his firm name is, that would be news to me. I've never believed he was "pumping" his own stock. He seems to be pumping a message that he believes in. Whether he is right is unknown at this time.
Simmons doesn't pump HIS companies stock ( never seen him do it once in public, don't even know if its a public company or not ), he pumps oilfield stocks, investments and IPO's for his companies clients, for his purposes during these hysteria moments, he pumps the entire INDUSTRY. The beauty of it for him is how well Peak Oil fits right in with his professional rewards. Scare people, get them thinking they can hedge rising oil and gas costs by putting stocks, oilfield stocks, his clients stocks, in their portfolio, that there is money to be made as the world is running out of oil, and he can HELP them. For a percentage of course.
seahorse wrote:
Further, back in the 90s, Simmons clearly stated his belief that speculators could pump up the prices of oil. So, on that point you and he would agree. My question would be, for how long? Surely, on a day to day basis I can see the argument, but for the last 7 years? It seems very reasonable speculators could inflate a trend, but not create a trend.
I don't have any professional experience with how well, or badly, speculators can drive the price of oil, for how long, over the basic economics of the total system.
It does not seem unreasonable that speculators might use oil as a hedge against a devaluing dollar, commodites in general have all been going up lately, none of this strikes me as a surprise as the Fed devalues the dollar.
When all the tanks are full, and there is nowhere to store more crude oil, someone, somewhere, will not be able to buy more, and will have to adjust their purchase quantities. When that happens, speculators in the market or not, something has to happen. OPEC has to restrict supply because people will buy less, if they don't restrict supply, the price will dive, and whichever speculators didn't see it coming will get hammered. Unless the Fed bails them out too of course. _________________ Freddy RULZ!
www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits) (or bankers) (or web "experts")
Joined: Oct 23, 2004 Posts: 5905 Location: New Jersey
Posted: Fri Mar 21, 2008 9:27 am Post subject: Re: Matt Simmons: Speculators set oil prices
Sounds to me like some here want to pump the oil market, but in a negative way.
Is that any different than what they accuse Simmons of doing?
If you want to ignore Simmons's, Seahorse's or my advice, then go ahead, it won't bother me one bit. It won't matter much in a few years anyway as price controls, allocations, and restrictions on the use of oil products will be implemented on the down side slope of PO - which will prevent most any kind of speculation.
Posted: Fri Mar 21, 2008 10:01 am Post subject: Re: Matt Simmons: Speculators set oil prices
seahorse wrote:
Further, back in the 90s, Simmons clearly stated his belief that speculators could pump up the prices of oil. So, on that point you and he would agree. My question would be, for how long? Surely, on a day to day basis I can see the argument, but for the last 7 years? It seems very reasonable speculators could inflate a trend, but not create a trend. Cramer even talked about pumping stocks but on a daily basis, not over any course of time.
I agree with you at the moment about the oil price trend. It's true that conventional crude and liquids supplies have been constricted in the last few years, and that's the foundation of the price trend. On top of this, however, is a growing component made of speculation -- people getting into oil because it's the next big thing, will never go down, is the new "NASDAQ", is a refuge from the dollar etc. There is a risk that this speculative bubble will inflate, and if that happens speculators can very much "create a trend".
Look at this graph of silver prices:
The huge spike around 1980 was caused by the Hunt Brothers, i.e. by speculators.
Look at this graph of the Nikkei:
That gargantuan spike was caused by dogpiling of speculators.
The idea that speculators are a minor fringe phenomenon is true, until they all stampede into the next big thing as a herd. _________________ A periscope up every ass!
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Fri Mar 21, 2008 11:57 am Post subject: Re: Matt Simmons: Speculators set oil prices
Interestingly, probably the one area that most can agree on is that as demand and supply constraints bump into each other, speculators will and can become involved. Even Colin Campbell predicted as much in his book "The Coming Oil Crisis". Now, putting aside Campbell's time tables, if you read what he sees are the effects of expensive oil, most, including KTH and JD would probably agree.
For starters, Campbell wrote that as demand meets supply, it will cause speculation in prices (Campbell's base case):
Quote:
By now, traders in the West have a better appreciation of the situation and perceive the dangers. Prices have become very sensitive to shift of opinion and comment
. . . p. 104
In Campbell's best case scenario, he sees people adjusting:
Quote:
The earlier economic growth in the industrial West has unexpectedly led to less demand because of structural changes in the way people live (2009 high case prediction).
p. 103.
Quote:
Islamic Fundamentalism, while contained, remains a potent but disorganized force, appearing in different guises and circumstances in Algeria, Egypt, the Middle east countries and parts of Asia. It is only indirectly a religious issue, and mainly reflects the last hope of a growing underclass of people unable to scratch a living from the desert. Little of the oil income . . . comes their way. p. 103
Its hard to see how Campbell's above to forecasts on a high oil production case are not happening even now and right on time.
Quote:
Low case scenario . . . the present level of oil production remains on a plateau until 2010, when it begins to fall due to resource constraints. Then, it is only three years before the Middle East Swing Producers reach the midpoint of their depletion, and they are no longer in a position to play a swing role anyway. Oil prices rise gradually during the period but are not the driving mechanism for the supply scenario.
p. 104.
Now, too often, people assume men like Campbell are preaching the end of the world. That's not correct. Like Hubbert, Campbell sees that life goes on. For example, Campbell writes:
Quote:
Great advances are made everwhere with the installation of solar energy, and there is a crash programme for nuclear power. Coal mines are redeveloped.
p. 105.
Quote:
These rather disjointed thoughts try to illustrate some of the features of the discontinuity that the end of cheap oil will, or may, create. There will probably be truly radical changes in life-style that we cannot imagine: yet many may indeed be very positive. It will be, in some ways, analogous to the wartime occurpation of France: life went on. It is not a cataclysm . . . by 2008, everyone will understand tat is is set to decrease. They will plan their lives to use less.
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