Crude Oil = $120
Well, almost. The May 2008 Futures contract hit $119.90 -- that's the all time high for Crude Oil.
>
>
Here's a quick excerpt from Bloomie:
"Crude oil rose to a record $119.90 a barrel in New York as the dollar dropped to an all-time low against the euro, prompting investors to purchase commodities as an inflation hedge.
The dollar touched $1.60 per euro for the first time after European Central Bank policy makers signaled they may raise interest rates because of inflation. Oil's 24 percent surge this year has pulled gasoline and diesel fuel to records, weighing on an economy already reeling from a credit crisis.Crude oil for May delivery advanced $1.69, or 1.4 percent, to $119.17 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures reached $119.90 today, the highest since trading began in 1983. Prices are up 88 percent from a year ago.
The May contract expired today. The more-active June futures contract rose $1.35, or 1.2 percent, to $117.98 a barrel."
There is a huge contingent that simply refuses to believe in the rally in Oil -- since around $40.
>
Source:
Crude Oil Reaches All-Time High Above $119 on Record Euro
Mark Shenk
Bloomberg, April 22 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGASa6pCjCrs&
Tuesday, April 22, 2008 | 03:00 PM | Permalink
| Comments (47)
| TrackBack (0)
add to de.li.cious | 
digg this! | 
add to technorati | 
email this post
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00e551f427288833
Listed below are links to weblogs that reference Crude Oil = $120:
Comments
I believe. I believe this is no different than any of the other messes Wall Street has helped create. There is underlying economic demand but even that is only marginally based on reality. Wall Street pushes because it realizes that additional economic demand has no other choice than to pay whatever it is. That is, until demand finally hits a wall. Some people believe this is demand-pull. Haha. The premium put in by massive changes in the participation level of futures market by 'managed' money is responsible. Finally it appears some in the government have realized there is a stench associated with this as well.
Posted by: bdg123 | Apr 22, 2008 3:43:45 PM
As per your last sentence...
HENCE, the Rally!!!!
Posted by: SINGER | Apr 22, 2008 3:44:45 PM
Is the price rise from supply and demand for the commodity, money racing to the next hot thing, the falling dollar, or a combination?
My solution: FOMC ... raise rates next week by 1/4 percent and issue a strong statement about inflation. That is all it will take to reveal the facts of the situation. The economy won't crumble over 1/4 percent, but it should scare the living crap out of people who are working on margin.
Posted by: cinefoz | Apr 22, 2008 3:46:12 PM
With the way it's done (been over that before) I'll give you props and put down that oil should be about $80 even with the BS fear mongering that occurs daily.
Strikes in Nigeria
Mexican Pipeline troubles (that's the best one yet!)
Japanese Tanker Problems (close second)
Rebels in Nigeria
Fog in the Houston ship channel
Any of these "incidents" have an effect on less than 3% of the total supply we are pricing in our "efficient markets"..
IMO It is a bigger scam than our "elections"..
Ciao
MS
Posted by: michael schumacher | Apr 22, 2008 3:47:16 PM
This is obviously the fault of those dirty hippies, I mean Jeb Bush, who doesn't want oil drilling along the Atlantic coast continental shelf.
Posted by: Douglas Watts | Apr 22, 2008 3:51:52 PM
Oil is the latest target of speculator's money.
As soon as Dick and Jane start getting in, the floor will drop out from under oil. This is classic speculation, nothing more.
As always, there will be some people getting hurt in the end. Some times, sheep deserve what they get. Wake up!!
In the backdrop of a slow down at least in the US, oil is WAY AHEAD of itself.
Posted by: BG | Apr 22, 2008 3:52:59 PM
Nice call BR. You were right on about this one.
Care to raise your price target?
Posted by: Vermont Trader | Apr 22, 2008 3:53:39 PM
If anyone here thinks that oil will pull back to $80 a bbl in the next few months, then you have a chance to double your money by buying DUG.
This site is usually light on specific buy tips, so there's one.
Posted by: E | Apr 22, 2008 3:55:27 PM
It is odd to say the least that since the arrival of an oil friendly administration in the White house the world has allegedly changed. If we were to believe the commodity bulls it is only now that China and India have awakened to good food and combustion engine driven movement.
The usual punditry of course supports the commodity bulls. Somebody once very astute called CNBC the Criminal Narrators Boosting Crude.
Futures will go higher as long as the Fed chooses to not protect the dollar. When this changes the commodity boom is over and a barrel of oil can reverse to rest at 30-40 USD.
Posted by: Alfred | Apr 22, 2008 4:03:05 PM
“There is a huge contingent that simply refuses to believe in the rally in Oil -- since around $40”.
This is true… and it’s not just about oil. Many people are blaming all of the rally in agricultural commodities on the corn/ethanol fiasco. Some blame the rally in commodities as being due simply to the creation of ETF’s and ETN’s. Then of course there are the evil hedge funds causing commodities to rise.
There are others who argue that as soon as the Fed stops cutting the Fed funds rate, commodities will plummet.
I’m going to bet with Jim Rogers on this one.
Posted by: DL | Apr 22, 2008 4:11:23 PM
It seems that once again truths have begat another circular logic positive feedback loop with oil, gold, etc. Though much of this scenario is fluff, I doubt this trend will abate until consumer demand is broken and the dollar rebounds. Until then, hedge your exposure, economize your life and ride out the storm.
Posted by: John Wellman | Apr 22, 2008 4:18:42 PM
Seems like the folks objecting to the high price of oil are the ones not owning any.
Price is reality no matter the 'cause'. But I guess we are 'entitled' to cheap oil and the sinister evil-doers must be brought to justice.
Alfred, 30-40 USD oil? It can happen. Markets..........fluctuate.
Posted by: Ross | Apr 22, 2008 4:22:24 PM
DL-
Not alone in the thinking that ETF's are the enabler of all this speculation. They grew like weeds in '06 and '07 and since the type of buying that is necessary to fuel this is not something you can hide very easily over at the CBOT...it makes perfect sense.
Now coming up with an energy strategy that uses a current food source????
Well only the mind of the truly delusional could come up with that...
OT: anyone thinking that real estate is going to fuel a recovery anytime soon should have a look at the recent dataquick numbers on foreclosures in one of the largest economies in the world...
Ciao
MS
Posted by: michael schumacher | Apr 22, 2008 4:23:33 PM
Wow. After all this time I am surprised to see that so many think this is all a conspiracy by greedy oilmen and their associates. Oil has a long way to run.
Of course, corrections (usually due to WS shorting) come and go. Demand for crude will not abate.
The US is not driving this.
The US is no longer in the driver's seat for the world economic growth.
Posted by: Ed Miller | Apr 22, 2008 4:26:01 PM
There may be a current premium based on speculation, geopolitical issues, etc. But even though demand may slacken somewhat over the short term and price may fall from current level, especially during this recession - the impact of flat and then declining world production versus very stubborn demand will create tremendous price rises into the long-term future. In our lifetimes, we will see a revolution from the impact of the decline of availability of this fundamental driver of world economy.
Posted by: Mind | Apr 22, 2008 4:26:55 PM
I don't know where this thing goes; but, it is not based on fundamentals. It is nothing but hot money. If it were not in commodities, it would be showing up somewhere else. Even though it affects us all directly, recognize it for what it is...speculation among the future traders. (They are loving this!!)
I am still curious as to whether Wall Street trashes the markets if a Dem wins the election. I think we are witnessing the last great money grab. Anything that can be exploited is fair game. Get it while you can before the party (the Republican party) ends.
The Party currently in power is throwing in their cards (capitulating if you will) knowing full well that they are going to feel the wrath of the voters in November. They see a tidal wave and are scrugging their shoulders saying "Oh well...What the hell!"
Mark my words, oil will go down after the election.
Posted by: BG | Apr 22, 2008 4:30:45 PM
Michael Schumacher - -
ETF’s may be the “enabler”, but not the cause. (The ETF’s merely let the “little guy” in on the action).
As for the corn/ethanol fiasco, it’s just about politics. States like Nebraska and Kansas each get two senators, even though nobody but farmers live there. And Iowa is the first caucus/primary in the presidential race. Farmers have us by the (insert relevant appendage), and that’s not going to change anytime soon.
Posted by: DL | Apr 22, 2008 4:37:47 PM
You can't put online economies representing close to 2 billion people (China and India) and expect demand to stay quiet and placid as if nothing happened, can't you?
That said, if we had been a little more generous in the use of our common sense, we would have listened more carefully to Jimmy Carter in the 70's, then Al Gore during the 2000 election not to mention the true experts (that would be those who are not beholden to the various don't-think-tanks) who all told us the same thing: no matter how efficient we become at the margins it won't make any difference until we learn to address the core problem a.k.a. conservation.
But noooooooooo! Conservation is for those damned libruls, tree-huggers, weed-inhalers potheads idiots. Cheap oil is a political thing dude! It's our God-given right, 'no watta'm sayin' man?
On top of that, this stuff called petroleum derivatives and compadres such as Nat gas are used quite a bit in agriculture, which has had a rather good run of its own...if you were long on them, of course.
Right now, the Ag market is getting rather screwed up, to the point of impeding price discovery. ( http://tinyurl.com/3feym9 ) And that can't be good for anyone.
We live in interesting times, no doubt about that.
Posted by: Francois | Apr 22, 2008 4:46:05 PM
WoW,
Flax seed prices went from $15.7 in February to $17.50 in March! Evil ETF's.
Break up the flaxseed cartel!
Posted by: Ross | Apr 22, 2008 4:49:04 PM
Jubak has a great article on this today. The countries who most need the income do not have the cash to increase production. Actually, lack of funds (Nigeria and Mexico), governmental policies restricting US involvement (Mexico) and government taxation of oil profits (Russia) will lead to DECREASED production by these countries. The countries which could increase production have no incentive to do so, as they are receiving a gazillion dollars for the oil that they are providing.
There is not an oil shortage per se, but if access to known oil supplies and increased use by emerging market countries is considered, we have a very tight and probably increasingly tight market for oil. Oil future were recently running at over $110 a barrel through 2016. Ugly.
Posted by: bk | Apr 22, 2008 4:49:19 PM
Jubak has a great article on this today. The countries who most need the income do not have the cash to increase production. Actually, lack of funds (Nigeria and Mexico), governmental policies restricting US involvement (Mexico) and government taxation of oil profits (Russia) will lead to DECREASED production by these countries. The countries which could increase production have no incentive to do so, as they are receiving a gazillion dollars for the oil that they are providing.
There is not an oil shortage per se, but if access to known oil supplies and increased use by emerging market countries is considered, we have a very tight and probably increasingly tight market for oil. Oil future were recently running at over $110 a barrel through 2016. Ugly.
Posted by: bk | Apr 22, 2008 4:49:46 PM
eat my dust.... i am holding oil stocks
and some gold stocks.
Barry is right, all you guys are laughing at
the oil rally. Go ahead and laugh while
my portfolio gets bigger.
There will be a top/bubble one day, maybe in 10yrs
when posters here like KEN H start buying oil futures.
Posted by: rickrude | Apr 22, 2008 5:01:12 PM
Rampant shorting by hedge funds has caused the price of scrap stainless steel to plunge YoY from $3914 to $3369 per ton. There ought to be an investigation!
Commodities 'experts' are kindly asked to follow the signs to see the egress. This may be your last chance to see this almost extinct species. The DEC calls on egress are at an all time high.
Posted by: Ross | Apr 22, 2008 5:05:58 PM
History lesson--the last great run in oil, from 73 'til about '82 saw similarly high prices plummet in short order to the low $20's by the mid-1980's--all because the dumbass fed woke up and realized it was all about the dollars. The only difference between now and then is that we have such a sophisticated financial system today until any moron w/ that knows how to point and click can get in on a rally. I just hope the fed doesn't socialize their losses, too, when they inevitably come.
Reminds me of an old joke at the time: Know the difference between a seagull and a Houston oilman? The seagulls are still making deposits on BMW's.
Posted by: DonKei | Apr 22, 2008 5:35:29 PM
☺☺"The US is no longer in the driver's seat for the world economic growth."--Posted by: Ed Miller | Apr 22, 2008 4:26:01 PM
It's called rationing, and price is the mechanism being used. Those who have money will have oil. Those who don't will not.
The 2% of the world's population that lives in the U.S. currently consumes 25% of the world's oil. As the weary Titan begins to stumble, that number will fall to 20%, then 15%, then 10%.
The U.S. no longer has the military or economic might to make it otherwise.
Posted by: DownSouth | Apr 22, 2008 5:51:19 PM
