Lehman warns that oil boom will deflate

Graeme

jato

cipi604

It's going to be just fine. 5$/barrel because of the lack of demand.

Cashmere · Intermediate Crude Joined: Mar 27, 2008 Posts: 809

Lehman probably had invested heavily short on oil.

Lehman is considered the next most probable bank to take a Bear Stearns.

dorlomin · Intermediate Crude Joined: Aug 05, 2007 Posts: 788

Surely oil can only be overpriced in the market for 3 months after that people have to deliver the futures they have bought and if no one wants $100 oil they will have to take a $20 hit per barrel on it....

I can appreciate that some consumers like airlines are going to be burned out of the market once they get through there credit but until then the price is justified by what the market will bear.

If the market price hikes were due to unschooled investors then surely the more experianced ones will be taking positions that will make them a killing at the expense of the new money?

And why are Sovs getting into short term high volatility markets wehn they are supposed to be mopping up all the long term bargins in euquities?

dorlomin · Intermediate Crude Joined: Aug 05, 2007 Posts: 788

Starvid

Oil prices might well fall by a third, or even by half for a shorter time. Or they could double.
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Peak oil is not an energy crisis. It is a liquid fuel crisis.

MD

EnergyUnlimited · Fission Joined: May 15, 2006 Posts: 2762

TonyPrep

wisconsin_cur

Or if there is demand destruction it will be just in time to mask a peak and declining output. It will allow producing nations more time to continue the lie that we do not have a problem.
_________________
The sage experiences without abstraction,
And accomplishes without action;
He accepts the ebb and flow of things,
Nurtures them, but does not own them,
And lives, but does not dwell.
-Lao Tzu

Starvid

Eli

dohboi · Light Sweet Crude Joined: Dec 05, 2005 Posts: 1000

Right, but the really stunning thing about the recent skyrocketing price of crude is that it has come about in the absence of any of these. If this doesn't convince folks that something more fundamental is going on, nothing will.

I had assumed that there would continue to be enough above-ground "noise" in the political...realm, that pundits would always have something besides peak oil to point to as an explanation for price hikes. But even without major non-geological explanations, most analysts still avoid attributing the enormous run up in oil prices to PO. Go figure.

Starvid

When oil went up to $85 and $100 (it's not that long ago...) I felt that there was a lot of speculation going on, that we had something of an oil price bubble. I am, of course, very "bullish" on the long term supply and demand picture, with demand going up a lot and supply just going up a little and then being flat and then entering terminal decline.

So high prices are backed by fundamentals in the long run. But is this we are seeing today and even greater speculative bubble (a bit like with uranium), or is it a sign market participants are starting to believe that we will enter an extremely tight situation (which we will)? That is after all not an incredible assumption as even people like the IEA have been talking about our energy system in terms of "the wheels are coming off" (yes, they said that, really).

But in the medium term, the next 5-10 years, prices should stay in the $65-$85 range according to Henry Groppe as there is 15 mbd of easily substitutable demand (power, heating and industry which will switch from oil to coal and gas) in the emerging markets.

So who is right and who is wrong? Well, I can say one thing. Don't trust investment banks and analysts. They just take the current price and add or subtract $5-20 depending on the direction the market is moving. With the possible exception of Goldman "Superspike" Sachs, but they probably just pulled a big number ouf of their ass. So did we, and no one pays us six figure salaries.

Frankly, my dear, I don't give a damn. I just keep my Exxon stock very close to my chest. Razz

_________________
Peak oil is not an energy crisis. It is a liquid fuel crisis.