Why Even Cheaper Oil Is Grim News

[ben_meyers]

Oh the poor speculators, stand by while I shed a tear.

The sharp drop in crude prices is further fallout from the Wall Street crisis and evidence of economic weakness

Trumping the Bulls
Lehman, Merrill Lynch, and other institutional investors helped fuel the commodities boom of the past year. As funds flooded the commodities markets, the price of oil, precious metals, and grains hit historic highs. But now the economic crisis is trumping bullish signals in the oil market, such as production halted by Hurricane Ike and simmering tensions between Russia and Georgia (BusinessWeek, 9/11/08). Energy stocks also took a hit on Sept. 15. Exxon Mobil (XOM) fell 5.5%, to 73; BP (BP) slid 5.2%, to 51; Chevron (CVX) shed almost 5%, to 80; and ConocoPhillips (COP) dropped 6.4%, to 68.

According to a report released on Sept. 10 by Michael Masters, principal of Masters Capital Management, institutional investors "began a mass stampede for the exits" in mid-July of commodities indexes like the S&P Goldman Sachs Commodity Index. Investors withdrew about $39 billion from the index, resulting in the selling of about 127 million barrels of West Texas Intermediate crude futures.

http://www.businessweek.com/bwdaily/dnflash/content/sep2008/db20080915_421011.htm?chan=rss_topEmailedStories_ssi_5

[DJ13]

1. Its not "cheaper oil" if its still 300% higher than a few years back

Typical Wall Street bullcrap.

[villager]

3. It's too cheap if it affects your plans for renovating that third home in the Hamptons...

n/t

[Vincardog]

2. Who would a thunk it?

[louis-t]

4. Oil at $147 bbl? Gas at $4.19. Oil at $93 bbl?

Gas at $4.09. Oil quietly fell below $95 bbl. Exxon-Mobil makes record profits while oil is $50 bbl. Let me get out my violin for them at $100.

[tekisui]

5. No money for investors to move into energy/metals.

They should be moving up, with other sectors tanking. Nothing to move.

[whosinpower]

6. Goes to show how utterly out of touch they are

When the tech bubble burst, and the global economy was touted, and globalization and outsourcing were and are the game of the day to increase profits - those of us simple peons had consistantly stated that this would bite us all in the butt because it was ERODING the middle class - and it is the MIDDLE class spending that gives the economy real strength - not wall street, not speculators.

Along comes the Bush years that allowed for more freedom and deregulation, allowed for lobbyists to write their own laws and regulations - and this is what they - and we have wrought.

So - finally they see the writing on the wall. The average middle class american is broke, or close to it. Consumer spending is down because they have little or no money to put in the gastank - they are losing their homes, the homes they do have, have decreased in value by 25 percent - food, health insurance and education have all increased with no good paying jobs to pay for all that. The government stripped the safeguards to grow a sustainable and vibrant middle class - and this is the result.

The only way to undo the damage is to regrow the middle class. The only way to a long term prosperous nation is to have good paying jobs - to allow people spending money and they will do their thing. Bailing out the banks - the Fed's can't - their cookie jar is empty and they have run out of options - can't cut the interest rates - God, they are only 2 percent now.