[truecougarblue]

http://finance.yahoo.com/news/Oil-price ... wUDjC7YWsA

Many here, including myself, surmised back when prices for crude and at the pump were exploding upwards that there would be a tipping point into demand destruction that would drive prices downward.

This has obviously happened, but we seem to have possibly reached the end of this overshoot where production capacity is starting to drop off faster than demand for fields where cost to produce is greater than what the market will bear.

I see a tremendous risk going forward due to the credit crunch that as prices increase that spare capacity will not come on line simply due to a lack of investment capital.

Am I off base here? I think I'm ready to get back on board with Goldman Sachs and $200/barrel oil!!!

[Pops]

Way back when some here surmised lots of FFs would be left in the ground either because many couldn't afford it and others would find away around.

Not sure we are much into the first part of that scenario or even starting on the second part but the idea looks more plausible than it did several years ago.

[alokin]

I think it's no worth making bets. What is more important than the price of oil is the price of the US$. If we enter hyperinflation $200 is just nothing.

[copious.abundance]

http://finance.yahoo.com/news/Oil-prices-surge-on-report-of-apf-14412863.html;_ylt=AieVhCFTw.FxB.23e1wUDjC7YWsA

Many here, including myself, surmised back when prices for crude and at the pump were exploding upwards that there would be a tipping point into demand destruction that would drive prices downward.

This has obviously happened, but we seem to have possibly reached the end of this overshoot where production capacity is starting to drop off faster than demand for fields where cost to produce is greater than what the market will bear.

I see a tremendous risk going forward due to the credit crunch that as prices increase that spare capacity will not come on line simply due to a lack of investment capital.

Am I off base here? I think I'm ready to get back on board with Goldman Sachs and $200/barrel oil!!!

>>> Don't be so confident <<<

[truecougarblue]

I think it's no worth making bets. What is more important than the price of oil is the price of the US$. If we enter hyperinflation $200 is just nothing.

Agreed, but if both things happen at once, a little leverage will go a long way.

Example:

USO Jan 2010 calls 65 strike are $0.50/contract, if oil did indeed go back towards 150 there is some serious money to be made. $10K in would give $845K at those levels. It would indeed need to be hyperinflation to match that gain.

Oh, and I'll take all comers on spec returns. I don't just talk the talk, I put my money where my mouth is.

[anarky321]

no

oil exporting countries are suffering huge falls in in their budgets; OPEC is barely able to reign in their members but everyone else will keep pumping because otherwise their governments will collapse - Venezuela, Ecuador, Russia, UAE, SA, Iran, the list goes on and on; noone can afford to cut output at $30; it's a prisoner's dillemma

oil will stay low until supply is physically constrained by geological factors, thus the price will remain low until then, or possibly even fall further since this depression is nowhere near peak (trough?)

[truecougarblue]

Isn't the point of PO theory that the second half of all available reserves is the hardest, and therefore most expensive, to get out of the ground?

We are hearing all the time about shut in of non-profitable wells. Markets are elastic and I'm just saying I think we may be stretching the band too far on the downside. It would seem that from here on out we will see a see-saw in prices and I don't se any reason not to benefit from it.

It took me over 3 years of watching the oil markets before I began to trade them and before that it was the same with financial sector, but I've made money both up and down on financials and plan to do the same on oil.

[bratticus]

The start of "Production Destruction"

Start Of???

So months ago when Alberta tar sands shut down that wasn't the start?

When Hugo Chavez's Orinoco Belt ultra-heavy crude bottomed out to the point he went begging the west for money? "Hey I was just kidding about the 'filthy capitalist pigmen' stuff, honest -- Hugo C. (I joke about this quote but not the facts.)

What happened to ANWR now that the price of oil is too low to support it?

The start of production destruction was long before February 2009.

This is more like the early years, not the start.