20 comments on The Bullroarer - Friday 18th July 2008
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Why? It's meaningless.
The daily price of oil and the issue of peak oil are just like today's weather and climate change, or this blackjack hand and whether the casino is making a profit. We have a lot of variation day-to-day, it's the long-term trend that matters.
The price of oil is only going up in the long term, the world's climate is changing, and the house always wins. None of which affect this particular moment in time.
Why is meaningless Kiashu?
While it's not a huge percentage, it's still a significant fall and I assume that thinking people would be interested in discussing possible interplaying factors of cause and effect, no?
A rise in US inventories has been cited as one reason. But exactly what does this mean? Falling discretionary demand due to high prices or recession, or both? Will this delay things and if so, how long for? How low could oil go and how long might this last?
Does anyone think it could fall significantly under $100 a barrel?
Meaningless might be overstating it but the oil price bounces around a lot - seasonal factors, geopolitical news, the herd's impression of changes in global growth etc etc all impact it, but are "meaningless" noise in the long term.
In this case, it seems to be the general sensation of economic doom hovering over New York and London combined with inventory numbers (which should be taken with a shaker of salt I might add). The absence of hurricanes in the Gulf of Mexico this year is another factor.
Most importantly (I gather) is Iran's signing up with Gazprom this week and the US scrambling to re-establish diplomatic ties with them (not unrelated events in my view) which has had a sudden impact on trader's expectations of future adventurism in the region. The Americans seem to be realising that they are losing the great game. Presumably McCain would like lower oil prices in the lead up to the election too (thus applying another brake on the hawks).
Will it fall under $100 a barrel ? Unlikely - but it depends on where the US dollar heads and what happens to the global economy. Personally I don't claim to have a crystal ball and thus don't make predicitons, though the dollar doesn't seem to have much in the way of fundamentals supporting it...
Supply and Demand says that there should be a floor under the oil price at about the US$120 mark. The recent run-up to nearly US$150 probably does reflect the marginal impact of "speculation", but on the other hand, continuing supply tightness should see us edging back towards US$140 by the end of the year. This is not the end of the pain. Unless there is some unforseen X-Fuel discovered, then the pain will steadily get worse.
Cheers Gav and Cretaceous.
It only took this bit of a fall for a few people I work with to assert that "the bubble had burst", oil prices would now plummet and we would soon be filling up 4WDs with careless abandon.
If you've still got any "oil shock sensitive" shares to get rid of, there may be a few optimistic buyers around in the next few weeks.
http://finance.google.com/finance?q=ASX%3AQAN&hl=en
;-)
No guarantees after that, though...