Oil is ready to break out (Wall Street Manna)

[chill_wind]

Tuesday, February 10, 2009

Oil is ready to break out

Whenever we get these new stimulus plans, and new money being thrown at problems elsewhere, it induces the speculators to take a look at another asset class.

That asset class is now oil. Oil is not staying at $40.

OPEC plans on more production cuts, and we are sucking supply off the market everyday in the Strategic Petroleum Reserve.

And we had Fast Money last night, telling us that oil can't rally, because there are 32 million barrels of oil sitting in storage in Cushing.

Then let them short it.

Cushing is always busy when oil is in contango.

But has anyone looked at the price you've been paying at the pump lately, and the widening of the crack spreads?

Doesn't anybody think that these refiners can trade around their storage? If Wall Street thinks this is free money, are they so smart, that the refiners haven't discovered it?

Which is why you are paying more for gas at the pump.

And which is why, $40 is the new floor for oil.

more: Wall Street Manna
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[notesdev]

1. Oil is a lousy choice

Don't bet the farm on a floor in oil prices. When a half million plus new people every month lose their jobs and no longer commute to work, that's a hell of a lot of demand that drops out of the oil market. Oil is a sucker's bet right now. The time to invest in it will probably be at a time when nobody is talking about it.

[jpak]

2. Congress and Obama need to take oil speculators to the woodshed

and get them something they won't soon forget....

:evilgrin:

[Ioo]

3. Strategic Petroleum Reserve is not the bad guy. It is also almost NOTHING of global supply

Strategic Petroleum Reserve is easy target... 1. WE NEED IT, it is a national security issue, and it is important.
2. It is a FRACTION of the intake of the US.

[snappyturtle]

4. I think oil price will rise in proportion to artificially manipulating supply.

What else is new? I hope the market(us)can call their bluff and continue to conserve. I am lucky in that I work from home and as we read this I am trying to come up with my third reason for driving today. If I don't have three legit errands, I stay home. It's amazing how long I've driven around on fifteen dollars worth of the 'liquid gold'!

[pampango]

5. I read that the cost of producing offshore oil here is around $40 a barrel.

Prices below that will cause some of those wells to be turned off, thus reducing the supply of oil. That kind of supports the idea that oil probably won't stay below $40 a barrel for very long. (Wars, natural disasters, and commodities bubbles can all overwhelm that, of course.)

[madrchsod]

6. during the big oil swindle last year

we were cutting back about 5 billion a week....even with the price drop bet the number is close or more than that now