Oil bubble to burst this week (employment, prediction, dollar, prices)
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There isn't a bubble. There is not a glut of stored oil anywhere.
You generally don't know bubbles for sure until after they burst, as it appears to investors that it is the real deal. Its the same way with oil. However, the run from $50 to $150 in a year without any real reason such as a war in Iran is absurd and unsustainable.
Looks like Lehman is out of the oil trading business for a while..they've been barred from one of the key unregulated market traders while they are under review. Now this is not Lehman trading for it's customers..this is Lehman trading for itself.
This just adds a little credence to the hype that all that Fed borrowing is being plowed into commodities so the banks can make back some money.
You generally don't know bubbles for sure until after they burst, as it appears to investors that it is the real deal. Its the same way with oil. However, the run from $50 to $150 in a year without any real reason such as a war in Iran is absurd and unsustainable.
Except that . . . oh maybe . . . in real measurable numbers, demand is not meeting supply?
But I agree, the US will not sustain this game too long. We will be flat broke in a year or two.
I say we will go over $150 by the end of the week. We shoud top out at $160-170 before going down to $120-130 in the fall. I don't think we will hit $200 this year. We are already starting to see resistance as speculators try to find reasons to push the price higher.
Quote:
Originally Posted by Philip T
Except that . . . oh maybe . . . in real measurable numbers, demand is not meeting supply?
But I agree, the US will not sustain this game too long. We will be flat broke in a year or two.
Game over.
Demand is meeting supply right now. Much of the price increase is hedges against inflation due to the falling dollar, and the fundamentals are that 5-10 years out, demand from China and India will have grown to a point where supply might not meet demand. However, a lot can happen in 5-10 years. Currently the fundamentals should support anywhere from $40 to $100 depending on who you ask, but only the most doom and gloom peak oilers really believe $150 is justified.
Told ya all so. Oil down about $10 a barrel in the past 48 hours! Damn, wish I had of shorted oil. should have listened to that oil executive, big wig! He says another $5-$6 and the panic selling will hit. Then a gradual, steady drop from there.
Oil bubble is just like the housing will never go down ;people conning themselves in to believeing oil will crash. The fundalmentals are just not there. There is little surplus production left in the world.Each time there is instability of any kind where oil is produced in will spike.Then itwill never go down until inventories sabalize which can take a longtime. With China and india growing use we may see shortages in the fututre if we don't start doing something effective.
You generally don't know bubbles for sure until after they burst, as it appears to investors that it is the real deal. Its the same way with oil. However, the run from $50 to $150 in a year without any real reason such as a war in Iran is absurd and unsustainable.
Do you consider the devaluation of the US currency a real reason? I do.
Oil bubble is just like the housing will never go down ;people conning themselves in to believeing oil will crash. The fundalmentals are just not there. There is little surplus production left in the world.Each time there is instability of any kind where oil is produced in will spike.Then itwill never go down until inventories sabalize which can take a longtime. With China and india growing use we may see shortages in the fututre if we don't start doing something effective.
Housing will never go down? Maybe I do not understand what you are saying but how can you say housing will never go down?
The fundamentals in oil are just not there to support a 50% return on investment over 1 year. .
Last edited by AJGIANTS; 07-08-2008 at 01:31 PM..
Reason: addition
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