Oil Prices Plunge!

[Raul]

Just skimmed this thread quickly at lunchtime, but it seems to me you guys are forgetting that more than ever the market for oil is international, not just national. To the extent that gas prices in the U.S. are based on oil pricesand the correlation is not an entirely direct onethe skyrocketing demand for oil in Asia is here to stay and will only grow. Free markets in a global economy will mean more short-term volatility in oil prices and permanently higher prices in the U.S. The relationship between supply and demand is becoming much more complicated.

Don't forget: oil companies exist not to provide U.S. consumers with the lowest possible gas prices but to return the maximum financial return to shareholders. Which means a lot more global speculation and a rush to meet demandin Asia.

Welcome to the "idiot" group ( you, me and Matt 5.0 ). Have to admit you explained it a lot better than me and Matt.

[nboucher]

Welcome to the "idiot" group ( you, me and Matt 5.0 ). Have to admit you explained it a lot better than me and Matt.

Proud to be a member. Maybe we should get hats.  

[avid]

Don't forget: oil companies exist not to provide U.S. consumers with the lowest possible gas prices but to return the maximum financial return to shareholders.

Very true, as evidenced by the latest quarterly earnings report  by ExxonMobile that showed it posted the highest profit of any corporation in US history (surpassing the earlier record it set last quarter)  Kinda makes a good argument for reclassifying  oil and gas as utilities like water and electricity eh?

[roadwarrior]

Oil is down $1.22 @ $113.31

8-)

[Siebert Outdoors]

sweet.  Keep going

[fishbear]

Just skimmed this thread quickly at lunchtime, but it seems to me you guys are forgetting that more than ever the market for oil is international, not just national. To the extent that gas prices in the U.S. are based on oil pricesand the correlation is not an entirely direct onethe skyrocketing demand for oil in Asia is here to stay and will only grow. Free markets in a global economy will mean more short-term volatility in oil prices and permanently higher prices in the U.S. The relationship between supply and demand is becoming much more complicated.

Don't forget: oil companies exist not to provide U.S. consumers with the lowest possible gas prices but to return the maximum financial return to shareholders. Which means a lot more global speculation and a rush to meet demandin Asia.

That is why we need to drill our own oil, natural gas and such and keep it for ourselves.  We have enough under our own soil to last us for 60 years, that along with research for alternatives would truly drop the price of gas, since the middle east does not want to lose its market share!!!!!  Competition is a GREAT thing.  It lowers prices and makes better products!

[nboucher]

That is why we need to drill our own oil, natural gas and such and keep it for ourselves.  We have enough under our own soil to last us for 60 years, that along with research for alternatives would truly drop the price of gas, since the middle east does not want to lose its market share!!!!!  Competition is a GREAT thing.  It lowers prices and makes better products!

Sure, but drilled here doesn't mean the oil stays here. The market is global, and oil companies will maximize their return. Look at what's happened with timber: our best logs now are loaded onto ships and sent to markets overseas. Forcing raw materials to stay in the U.S. smacks of protectionism, which is a very unpopular word among a lot of people. America First and Free Enterprise don't always go together.

As for Avid's suggestion of turning the oil business into a public utility, if health care reform can be labeled socialism, imagine what fun the pundits will have with that one!

No, the real problem, IMHO, is that sloganeering now passes for thinking, and political slogans pass for real thought. Which is why there's such a shortage of new ideas out there. Both parties make sure they are ridiculed into oblivion before the ideas can gather any traction.

Okay, are we getting political now??  

[avid]

As for Avid's suggestion of turning the oil business into a public utility, if health care reform can be labeled socialism, imagine what fun the pundits will have with that one!

You are no doubt right about the cries of socialism that this would stir.  Funny, but when the taxpayers bail out a brokerage house like Bear Stearns, it's called "rescue"  but when we try to stabilize prices or provide healthcare it's called "socialism"

[roadwarrior]

With the ongoing conflict in Georgia, oil has surged the last several days. After briefly touching $111, September futures rose roughly $10. Todays's surprising turnaround has resulted in a decline of $6.50 to $114.68.

The oil market will continue to be very volatile, with high "event risk", but should continue to trend down. There appears to be significant resistance at $110, but once through that level, a quick drop into the mid $80s is a possibity with a bottom around $65 per barrel.

http://www.msnbc.msn.com/id/12400801/wid/18298287/

8-)

[J Francho]

With the ongoing conflict in Georgia, oil has surged the last several days. After breifly touching $111, September futures rose roughly $10. Todays's surprising turnaround has resulted in a decline of $6.50 to $114.68.

The oil market will continue to be very volatile, with high "event risk", but should continue to spiral down. There appears to be significant resistance at $110, but once through that level, a quick drop into the mid $80s is a possibity with a bottom around $65 per barrel.

I just backed out of oil earlier this year.  When it drops again, I might be interested again.  It was a tough decision, but a smart one.  Prices are unnaturally inflated and cannot last.

[roadwarrior]

I paid $3.32 for Shell regular in Corinth, MS yesterday.

My wife filled-up with her Schnuck's discount for $2.82!

8-)

[Bassin_Fin@tic]

I paid $3.32 for Shell regular in Corinth, MS yesterday.

My wife filled-up with her Schnuck's discount for $2.82!

8-)

Man,it's amazing how that seems "dirt cheap". Lowest I can find round here now is 3.58.

[Troutfisher]

I paid $3.32 for Shell regular in Corinth, MS yesterday.

My wife filled-up with her Schnuck's discount for $2.82!

8-)

Man, it's still at $3.75 here and holding.  I'd like to wake up one morning and it be at $3.32!

[Hookemdown.]

3.27 :)

[burleytog]

Kinda makes a good argument for reclassifying  oil and gas as utilities like water and electricity eh?

Sure way to guarantee shortages and an enormous clusterfunk.

[Troutfisher]

Kinda makes a good argument for reclassifying oil and gas as utilities like water and electricity eh?

Sure way to guarantee shortages and an enormous clusterfunk.

x2.  Oil companies don't have to sell the gas.

[roadwarrior]

Oil is down $8.01 @ $107.46

;D ;D ;D ;D ;D ;D ;D ;D

[Siebert Outdoors]

Best news so far I've heard.  

[fishinfiend]

I sure wish we did not buy 50 gallons before the hurricane to use for the generator and vehicles :-[

Better safe than sorry.

[Hookemdown.]

Is gas still dropping?

We've had a 30 cent spike in the past two weeks.

[heathen]

Closed today at $109.71 down $5.75

[roadwarrior]

Currently down a little from yesterday's close: $108.58.

;D ;D ;D

[5bass]

Currently down a little from yesterday's close: $108.58.

....and still WAY overpriced!  :

[Long Mike]

The most encouraging thing about this whole scenario is that many of the developing countries can no longer afford to subsidize the price of gasoline being delivered to the masses.  As a result, the masses have done exactly the same thing as we in the West have done. i.e. Reduce demand.

I think the speculators have begun to see the handwriting on the wall and are beginning to slowly bail out.  

One of the greatest positive signs that I am seeing of late is the massive advertising campaign championed by Boone Pickens.  He's doing great stuff that will give our politicians no other choice but to get up off their butts and develop a cohesive energy policy.

[roadwarrior]

By Grant Smith and Ayesha Daya

    Sept. 4 (Bloomberg) -- OPEC, the supplier of 40 percent of the world's oil, will probably keep producing at a record pace as $109-a-barrel crude squeezes the global economy.

    The 13-nation Organization of Petroleum Exporting Countries will reject calls from Venezuela and Iran to trim supplies at its Sept. 9 meeting in Vienna, according to 29 of the 32 energy analysts surveyed by Bloomberg.

    ''They want to prevent a build-up of crude stocks, which rules out an increase, but don't want to send prices skyrocketing by announcing a cut,'' said Mike Wittner, head of oil research at Societe Generale SA in London. ''OPEC won't take any formal action.''

    Oil plunged $38 a barrel, or 26 percent, from its record

$147.27 on July 11 as economies slowed, the dollar halted a three-year slide against the euro and Hurricane Gustav caused almost no damage to drilling platforms and refineries in the Gulf of Mexico. Demand for crude will increase 1 percent in 2009, the slowest growth in seven years, according to an Aug. 15 OPEC forecast.

    Record oil prices spurred European inflation to 4 percent in July and contributed to the first quarterly contraction in the region's economy since the euro was introduced almost a decade ago. In the U.S., gasoline demand fell for 19 consecutive weeks, according to MasterCard Inc., with fuel now near $3.70 a gallon.

    The world economy is ''precariously close'' to a recession in 2009, UBS AG said last month as it cut next year's global growth forecast to 2.9 percent. It considers a 2.5 percent rate as one that is consistent with a recession.

                         Exceeding Limit

    Oil for October delivery was trading 35 cents higher at $109.70 a barrel on the New York Mercantile Exchange at 1:38 p.m. London time. Yesterday, the contract fell 36 cents to

$109.35 a barrel, the lowest settlement price since April 8.

    The OPEC members with quotas produced about 592,000 barrels a day more than their official limit of 29.673 million last month, according to Bloomberg estimates. Iraq has no quota. All the countries except Saudi Arabia are pumping at close to capacity to meet rising demand and compensate for declining supplies from Nigeria, Iran and Venezuela.

    While leaving quotas unchanged, the group may curtail production to prevent inventories from swelling, said Adam Sieminski, Deutsche Bank AG's chief energy economist in Washington.

    ''If prices are rising they will leave production alone, and if they are falling they will trim a little,'' he said.

    Oil stockpiles, excluding government reserves, were above average in July and enough to meet 54 days of demand, according to the International Energy Agency in Paris.

                         Economic Burden

    The agency's Executive Director Nobuo Tanaka recommended during an interview Brussels today that OPEC maintain output levels, adding that recent price declines reflect ''the slowdown of the economy.''

    ''If stocks were ballooning then you could see pressure mounting within the cartel for a cut,'' said Harry Tchilinguirian, senior oil analyst at BNP Paribas SA.

    Most extra pumping came from Saudi Arabia, the world's largest oil producer, which raised output by 500,000 barrels a day in June and July to calm markets.

    Venezuela and Iran, OPEC's second- and third-largest producers, want the group to consider reducing supply to keep prices from falling below $100 a barrel.

    ''Returning to quotas does not mean a production cut, it's a return to previous output commitments,'' Iranian OPEC Governor Mohammad Ali Khatibi said in a Sept. 1 telephone interview in Tehran. ''The result will be a decrease in output, but it's different from a cut in the ceiling.''

                       Prices 'Fair'

    Prices of just over $100 a barrel are ''fair,'' Venezuelan President Hugo Chavez said on Aug. 27.

    Nigerian Petroleum Minister of State Odein Ajumogobia and Ecuadorean Oil Minister Galo Chiriboga said in the past week that OPEC should maintain current production.

    OPEC ''probably doesn't want to see another run at $150,''

said Societe Generale's Wittner. ''But they're worried the $35 downward correction will continue.''

    The group meets again Dec. 17 in Algeria.