Oil's energy contribution has declined by about 12% since 1999. The world's economies have also declined by about 12%. (Using conventional metrics, which are time delayed determinations, this will only be seen in hind sight). The massive destruction of asset values now occurring testifies to it happening.
Peak is well behind us, world economies have peaked and will continue to decline.
Simple explanation for that...the spike in today's price was the October contract being closed out and the short sellers got squeezed big time. The $108 is the new, November front-month contract, which will be the starting price tomorrow am.
Sure will be interesting if we see a repeat of today's spike or not, though. _________________ Nowhere to run, nowhere to hide...
...and the meek shall inherit the Earth!
Simple explanation for that...the spike in today's price was the October contract being closed out and the short sellers got squeezed big time. The $108 is the new, November front-month contract, which will be the starting price tomorrow am.
I did predict just this occurance in the "Another Record" thread.
Posted: Mon Sep 22, 2008 3:03 pm Post subject: Re: Oil and Gold go Boom-Boom
So, how does a price spike on contract closing day affect the price of oil in the near-term? Now that we've reset to the new front month at a "mere" $108, is it like today's $25 spike never happened, or what? How is this priced into the market? _________________ "It's called the American Dream because you'd have to be asleep to believe it."
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Mon Sep 22, 2008 3:29 pm Post subject: Re: Oil and Gold go Boom-Boom
Let’s review, here’s the primary reason gold and oil are moving up:
Quote:
The $100 billion the Treasury raised in special issues this week has been mostly deposited with the Fed. The Fed apparently has directly lent most of this money back to banks and brokers.
To over simplify then, the Treasury has acted as a second Federal Reserve and created $100 billion in new money. That's because the Treasury has facilitated the financing of $100 billion in assets formerly just owned by banks/brokers and now 100% financed by the Fed.
This is in addition to the creation of $300 billion in new money, mostly in dollars - even in Europe. The combined effects of the new money will have powerful effects on some asset classes at first, and will eventually bleed into the world economy - causing widespread inflation.
It takes about two years for the effects of monetary expansion to be fully reflected in retail prices. The price of basic commodities like gold, oil, grains are likely to rise first.
More specifically, as to why oil went up so much today, my WAG is that a large investor (possibly the US government) intentionally sold futures contracts short it didn't have earlier this month, and was forced to buy them back today.
You may remember the other day, the Treasury announced that the $50 billion exchange stabilization fund was now being used as a kind of FDIC fund for money market accounts.
The ESF also is authorized to ‘stabilize’ any market – that includes the energy markets.
Note that there were many more oil futures contracts expiring today than available oil to deliver. The 'seller' may not have had a profit motive, but some other motive - such as placating the American public during a time of financial crisis.
Next up – gasoline. There are outstanding contracts for 40,000,000 barrels of gasoline to be delivered about the end of the month. There isn’t that much gasoline around to be delivered to New York harbor to meet the futures commitments – so someone will be buying back contracts. Who else would be willing and able to sustain such huge losses besides the ESF?
Please note I have no proof of the above and alternative explanations are welcome. _________________ It's already over, now it's just a matter of adjusting.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Mon Sep 22, 2008 3:33 pm Post subject: Re: Oil and Gold go Boom-Boom
emersonbiggins wrote:
So, how does a price spike on contract closing day affect the price of oil in the near-term? Now that we've reset to the new front month at a "mere" $108, is it like today's $25 spike never happened, or what? How is this priced into the market?
Technically, today's move doesn't affect the November contract. However it does reveal that one or more groups are attempting to knock down the price of oil by short selling oil contracts they don't have.
There are November contracts representing 300 million barrels expiring next month. The same thing may happen again if that short seller(s) are in there doing their money losing thing again. _________________ It's already over, now it's just a matter of adjusting.
Posted: Mon Sep 22, 2008 3:49 pm Post subject: Re: Oil and Gold go Boom-Boom
.
The surge in oil price is not important , it's only stupid traders covering their loosing positions
it is of no more importance than oil dipping below 100$
but indicate an underlying strength in price around 110~120
with the winter peak demand coming , the price would rise further
we'll see how much the demand has been dampened over the coming month
Joined: Mar 26, 2005 Posts: 3904 Location: over here
Posted: Mon Sep 22, 2008 3:51 pm Post subject: Re: Oil and Gold go Boom-Boom
DantesPeak wrote:
emersonbiggins wrote:
So, how does a price spike on contract closing day affect the price of oil in the near-term? Now that we've reset to the new front month at a "mere" $108, is it like today's $25 spike never happened, or what? How is this priced into the market?
Technically, today's move doesn't affect the November contract. However it does reveal that one or more groups are attempting to knock down the price of oil by short selling oil contracts they don't have.
There are November contracts representing 300 million barrels expiring next month. The same thing may happen again if that short seller(s) are in there doing their money losing thing again.
could it maybe be that someone big held most of those contracts and knew they had to be bought back and hence sold them for as much as possible? _________________ "The best thing about the future is that it comes only one day at a time."
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Mon Sep 22, 2008 3:58 pm Post subject: Re: Oil and Gold go Boom-Boom
Bas wrote:
DantesPeak wrote:
emersonbiggins wrote:
So, how does a price spike on contract closing day affect the price of oil in the near-term? Now that we've reset to the new front month at a "mere" $108, is it like today's $25 spike never happened, or what? How is this priced into the market?
Technically, today's move doesn't affect the November contract. However it does reveal that one or more groups are attempting to knock down the price of oil by short selling oil contracts they don't have.
There are November contracts representing 300 million barrels expiring next month. The same thing may happen again if that short seller(s) are in there doing their money losing thing again.
could it maybe be that someone big held most of those contracts and knew they had to be bought back and hence sold them for as much as possible?
That's probably what did happen, and it could have been a game of chicken, but I think it's likely that the all parties figured how much oil was really around - which was not enough. _________________ It's already over, now it's just a matter of adjusting.
Joined: Mar 26, 2005 Posts: 3904 Location: over here
Posted: Mon Sep 22, 2008 4:12 pm Post subject: Re: Oil and Gold go Boom-Boom
funny thing is, Brent never moved beyond $105, so what is really the price of oil right now? Did someone get royally screwed over or has this been a case of market manipulation coming to light?
My first thought though was that the sudden runup had something to do with the spot shortages occuring in the US and the expectation that they might get out of control in the next few days... _________________ "The best thing about the future is that it comes only one day at a time."
Posted: Mon Sep 22, 2008 5:04 pm Post subject: Re: Oil and Gold go Boom-Boom
Cashmere wrote:
Jotapay wrote:
A Swiss banker on Bloomberg TV last night was saying paper was worthless. He recommended getting gold and commodities, and he stressed PHYSICAL assets, not ETFs. He predicted gold could easily reach $2500/ounce in 2 to 3 years.
ETFs!! hah hah! I love it. A piece of paper that says you own something.
Why does anybody own those when owning the physical bullion is so simple?
I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section to do hereby prohibit the hoarding gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations and hereby prescribe the following regulations for carrying out the purposes of the order: _________________ Thinking outside the petri dish.
Posted: Tue Sep 23, 2008 12:25 am Post subject: Re: Oil and Gold go Boom-Boom
Cid_Yama wrote:
Oil is up 17%, nearing $123.00. Panic is setting in as shorts scramble to cover.
It's at $123 now... one word: wiiiii. Some sense of karma/justice/consequence is dawning. The "bailout drunkness" is over. No free food, now come for a ride in DOOM! _________________ @deviantART @wordpress @hi5
I follow Nate's every word, he's one of the best peak oil analysts. Take his corpus over Kunstler's any day, though I like Jim's rants as well.
Fascinating theory Dante. PADD 1's record for Total Motor Gasoline imports was around 1.3 mb in a week and the number bounces around quite a bit, does the SEC impose limits on the volume of contracts if physically delivered in some way? There's the possibility the ESF was attempting to compensate for all the shut-in production as well, or is that the domain of the DOE or the like? _________________ Cogito, ergo non satis bibivi
C'mon man, who're you gonna believe?
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Tue Sep 23, 2008 5:24 am Post subject: Re: Oil and Gold go Boom-Boom
Never heard of the DOE being authorized to buy any energy products except for the SPR and a heating oil reserve, and some other minor reserves.
However the DOE has authority allocate interstate shipments of energy products, such as through pipelines or inter-state barges, although I'm not sure if they would be able to control foreign gasoline imports.
The CFTC can control contract limits although that doesn't seem to have much influence on trading. _________________ It's already over, now it's just a matter of adjusting.
All times are GMT - 6 Hours Goto page Previous1, 2, 3, 4Next
Page 3 of 4
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
News
Discussions
Resources
Members
Forum FAQ
Search
Usergroups
Profile
Log in to check your private messages
Log in
