Oil is Really Cheap
To add to my July 10th post titled “Oil Is Cheap”, I just want to add that the new developments in the middle-east with tensions and conflict rising between Palestine and Israel could may well put the price of oil at $100 by year end.
To make things worse, the Wall Street Journal reports that China’s oil imports increased over 15% the first 6 months of this year compared to the same period last year. And while the International Energy Agency predicts that demand for oil in China will increase just over 6% this year, I wonder if the Chinese are thinking oil prices are cheap and are looking to build inventory. That would certainly explain why they would import 15% more oil when demand is growing at 6%. Maybe as reader Marco from Italy pointed out earlier, we might even get to my price target of $125 sooner than I predicted earlier.
– Faisal Laljee
oh god keep your feet on the ground. 17 central banks are in concerted effort to steadily raise interest rates and crush this global commodity demand bubble. they arent just going to hand over extra cash to devils like Iran.
Genuine demand does not create bubbles. It raises prices. Bubble is a term coined for internet stocks (and which stuck). It was appropriate in those cases where stocks went higher for no reason other than the potential of big earnings that never materialized.
Oil has been at $200 before (price in late eighties adjusted for inflation). “They” didn’t have a problem handing over the extra cash then. No reason for anything to change.
– Faisal Laljee
your points are good.
my point is “genuine
demand” is waning.
17 central banks
are raising the interest
rates at a torrid pace,
including your center
piece of demand “china”.
did you know that June
US retail sales had
a stunning reversal?
“oil was really cheap”
at the beginning of the economic
cycle upswing in 2002-2003
around $20s. to say
oil really cheap in the 70s
or 80s, as global economic
activity is slowing down
is counter intuitive.
Speaking about rising tensions, the old WW-II battlefield has been replaced with urban warfare tactics.
Does anyone have updated info on “Corner Shot”?
http://www.combatvids.com/showvideo.php?id=1880
I have traded XOM calls for the past two years, buying when the stock breaks 60 and selling when the stock gets to 65. I closed out my calls on Friday. (The prudent thing to have done was to have sold everything and put it into XOM calls – joking)
here is your genuine demand….
released tuesday morning..
Fund managers see weaker global economy
Higher energy prices, interest rates cited in Merrill survey