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Do you think Oil will go below $60 after the presidential election?
I think so.
If there is a demand and supply, theory how could have oil at $ 95 in January, at $150 in June and back to $100 in September. I think now it is going to go below $60.
Even OPEC and Top commodity oriented Banks cannot stop this commodity slump now.
Factors to consider
Commodity investors and index investors are are pulling out their futures holding now.
Even those who were bearish on the USA dollar suddenly have become bullish.
Any other thoughts? Thanks in advance.
Answers
951 points
Grudun answered one year ago …
I don't think it can/will go that low. As we already saw today with the cut by OPEC of 520,000 barrels per day they will not let prices drop that much without a fight. Add to that the significant amount of investments in oil fields that REQUIRE a price of more than $50-$75 a barrel to break even I forsee problems coming up every time oil threatens a new threshold. When oil breaks $100 look for a event when it approaches each 5 or 10 dollar point below that. Someone will rattle a saber, fire a missle, not pay off some nigerian rebels, or a production drop will be announced. However the trend has started so I think that $85 may be possible.
Read more from Grudun
300 points
CG answered one year ago …
After the election? Before the election, maybe ;)
>>> If there is a demand and supply, theory how could have oil at $ 95 in January, at $150 in June and back to $100 in September. I think now it is going to go below $60.
Simple. In January people were willing to pay $95 and in June they were willing to pay $150
Soon they'll be paying $90 or maybe $85. Possible $60, but I doubt it'll get quite that low.
Sure there are supply issues, but demand is tanking and most importasntly the speculators and hedge funds are unwinding.
896 points
jillybeansisme answered one year ago …
Tbone just asked if oil has topped out . . . I replied, In my opinion there is no such thing as oil "topping out." I suspect it is merely catching its breath for the next sprint. Weather, politics, stupidity, greed, all get factored in at some point and I just can't see it not going up (although it would be nice to see .65/gallon again!).
I stand by this and say, I truly wish it would, but I can't believe that it will ever see $60/barrel or less. Even with alternative energy surges there will still be incredible demands for oil. China's need grows by the nano second, India just behind it, Europe pays double or more per gallon of gas, oh and then there's the rest of the world's demands. I just don't see it dropping that drastically even if domestic drilling becomes the trend (gee, isn't that green of our multi-billion dollar profiting corporations) because the oil corporations want the profits and I doubt would pass much on to us (the corporate executives will probably quadruple their annual salaries and bonuses though).
300 points
CG answered one year ago …
I'm attemepting to be friendly and informative here, which I say in case my written "tone" appears otherwise.
>> Europe pays double or more per gallon of gas
I think you're confusing the taxes in the gas price with the actual price they're paying for gas? If not you, most people do.
This is a common mistake, at which point we are not comparing "apples to apples". This is especially important due to the fact that at-the-pump gas taxes in most countries are a percentage of the gas price while in the US it is a flat amount.
That being the case, in a percentage situation if the tax is 30% then if the price of the actual gas goes from $2 to $4 then the price at the pump will go from $2.60 to $5.20 whereas in a fixed tax example if the fixed tax is 30 cents then if the price of the actual gas goes from $2 to $4 the price at the pump goes from $2.30 to $.430
When gas was $2 the difference was 13% between the pump prices of the two different tax regimes. After gas doubled, the difference at the pump is 21% ... and so on.
It allows people in the fixed tax regime to say "those people pay much more for gas", but :
1. so what? that's irrelevant to the price of crude, unless you're arguing what kind of prices a different economy is willing to support.
2. the fixed tax regime pays the additional costs elsewhere - perhaps in income taxes, sales taxes, or the bankrupting of the nation and trashing of the currency so gas might appear cheaper at the pump but all imports rise in price.
3. speaking of which, if you adjust the price of oil for the collapse of the US currency it is priced in, and instead price it in gold, you'll find it hasn't gone up much at all .. if at all.
4. pricing in "real" terms is important. The real issue isn't that oil has gone up the past few years, it is that the US dollar has collpased which has nothing much to do with the supposed aggregate increase in world demand. I say "supposed" because I doubt their increased demand is outpacing the "first world" decreasing demand and factor that the "emerging nations" are also about to have, or already having, severe recessions.
5. so the real question here is
>>> ) because the oil corporations want the profits and I doubt would pass much on to us
The US is increasingly socialist/communist. Witness the Freddie/Fannie bailout. Asleep-at-the-wheel greedheads allow and in fact facilitate and profit from a massive bubble then stick the taxpayer with the bill for the fallout. Given the significance of this date, it makes me wonder why the citizenry is looking overseas in caves for their "enemy".
Don't be surprised if one day the US gov't is stealing from those who paid billions to find and develop a resource, just like the "thrid world" countries often do. Then of course the gov't will screw it up and the people will still be no better off while those in power and those connected to then get richer.
Back on topic, oil at $40 or lower wouldn't surprise me at all given ho wmany people believe it cannot happen.
History repeats and the one thing we learn from history is that people learn nothing from history.
300 points
CG answered one year ago …
Sorry I screwed up a couple things above.
1. the pump price in the fixed tax example when actual gas is at $4 should of course be $4.60 not $.430 as typo'd.
# 5. was truncated. It should have read "5. so the real question here is what is the future of the US dollar? I believe it to be quite dire, but so too for most other currencies and in a deflation gold won't do much better. For now the US dollar could continue to rise for some time, so oil would decline in price much further. Demand barely factors at all, other than the decreased demand of speculators and hedge funds because they're going broke.
197 points
whiteshadow204 answered one year ago …
There are too many types of oil production and alternative fuel production that cease to be profitable if the price drops to $60 and beyond.
As the price drops, so will production. Sure demand dropped some with the increase in price, but a production decrease will drive the price right back up again.
I'm not surprised oil is dropping below $100 again now, but I agree completely with jellybean when she says she thinks oil is just catching its breath. Energy demand is skyrocketing globally, and oil is still the major supplier of that energy, and will be for a long time.
300 points
CG answered one year ago …
Once again, if you measure in something other than scammy fiat currencies then you'll find the price of oil having gone up has little to do with a supposed increase in demand.
http://pricedingold.com/crude-oil/
Priced in gold, crude has only doubled ... since 1950 !
Now check a chart of the US dollar since 1950 for comparison (I can't find a linkable chart). *That* is a story of supply and demand. And that is why the price of oil appears to be much higher than it is.
300 points
CG answered one year ago …
"The World Needs Less Oil
"The growth in global demand for oil will be at its weakest for six years in 2008 as record prices and recent reductions in subsidies in developing nations take their toll, the International Energy Agency has predicted.
"In its monthly report the IEA, an energy advisor to 27 industrialised countries including the UK, cut its previous forecast by 230,000 barrels per day (bpd) and now predicts that oil consumption will grow by 800,000 bpd this year, the slowest since 2002."
http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml =/money/2008/06/10/bcniea110.xml
As can be seen here in this chart, while overstating the demand side of the issue at the same time people are forgetting the supply side. http://www.telegraph.co.uk/money/graphics/2008/05/22/ccoil122a.gif Read "Twilight In The Desert" for more on the supply crunch, and how Saudi fudges its reserve figures to maintain its clout.
731 points
thinker70 answered one year ago …
There have been so many excellent answers above that anything I could add would probab;y be somewhat redundant1 I can only reiterate that prices much below $100. are highly unlikely and very temporary if they do happen, unless of course the whole world financial system comes unglued as the U.S. financial problems worsen!
As the burgeoning Asian middle class demands more of what we as North Americans and Europeans have taken for granted for decades, prices of ALL finite commodities will be forced upward to JUSTIFY finding and developing new expanded resources to SUPPLY the demand, otherwise we freeze in the dark if we do not starve first. Rising prices are inevitable in a fiat currency system that makes INLATION an automatic result. Myron Martin
216 points
jrj90620 answered one year ago …
Only if there is a world wide depression.With the huge monetary inflation by central banks recently this should prevent demand falling enough to see $60 oil.
Read more from jrj90620379 points
dustbusterz answered one year ago …
I actually fell it will depend on who gets into office where prices will head. However, I really don't see oil every coming back to $60.00 a barrel any more. First, I feel if Mc Cain gets in, we will see problems with supply as he will antagonize other nations like Russia , Iraq, Iran, and others ,up setting the apple cart, and we should see a serious drop in supplies due to this guy which will only drive up prices here at home.
As for the Oil Cartel, they are spoiled now, and like the extra money they are pulling in so much, they are already cutting supplies (which should in the long term see prices rise) but right now,as we can see, they are still on their way down for the moment.No I think we have actually seen the last of $60.00 Oil.Look for continued development in Alternative sources of supply and look for legalize prostitution in California . Did anyone see that article by the way?? So who supports this legalizing Prostitution?
102 points
courierguy answered one year ago …
trying to equate oil with gold doesn't work. you can mine gold and put it into coins, bullion, or jewelry and it remains. with oil you mine it, process it and use it and it is gone forever.so sooner or later oil supply depletes or gets to expensive to mine and the price will keep going up albeit with some pauses as we are having now.
Read more from courierguy300 points
CG answered one year ago …
>>> trying to equate oil with gold doesn't work.
I wasn't equating oil to gold. I was talking about looking at the *real* price of oil, in gold for example, rather than in fiat currencies that are depreciating in value weekly. Pricing oil in dollars makes it look like it is going up in price/value, when in fact it is really dollars dropping in price/value. Not semantical, it's an important distinction.
As the real oil price increases, more is economically recoverable and saleable such as Canada's oil sands and that supply is increasing more than demand in this collapsing economy.
20. 50 or 100 years from now? Maybe a much different story. Still have to price it in real terms to compare apples to apples though. Price it in gold, Honda Civics, 12-packs of Bud, tickets to see the Yankees, Big Macs, but not in dollars if you want to really see if it has gone up in *real* price or not.
