A sign the oil prices are headed down:
Crude oil may rise next week on speculation that OPEC won’t increase production as fast as consumption grows this winter. Twenty-one of 35 analysts surveyed, or 60 per cent, said oil prices will rise through Nov. 9, the first bullish response since July 6.
Is that a mistake? The first bullish response since July 6th? So they were bearish throughout a 30% rise in price, and now become bullish? That’s funny. But this may be even funnier:
Respondents have predicted price drops in the previous 16 weeks. Prices have declined in five of those weeks. The oil survey has correctly predicted the direction of futures 52 percent of the time since the survey’s introduction in 2004.
Wow! All that analyzing, and correct 52% of the time. I can’t even think of anything funny enough to do that justice.
However, that seems to fly in the face of yesterday’s OPIS report:
11/1 – Crude oil traders moved to take profits this afternoon amid a flurry of forecasts for a steeper downward correction. Analysts this afternoon pointed to a recovering U.S. dollar as a catalyst for more selling.
I guess I will just flip a coin. I know my 50% odds aren’t quite as good as the 52% accuracy rate of the analysts, but my coin flip doesn’t charge me for the prediction.
Certainly, the “experts” or pundits, and everybody else (except for the doomsters) have been wrong on the price of oil this year.
I suspect that is because we have moved into an irrational bull market, and all that entails. Small stories become big stories – one field to halt production, and it is headlines.
The doomsters have been right, but a broken clock is right twice a day.
And we still have the inscrutable actions of hedge fund traders to consider. Do they have bets placed at $100? Have they wagered borrowed billions? Are they then willing to do what it takes to make $100 a reality? Plant news stories? Maintain alarmist websites? Fake a few trades on the overnight? Do a few trades back and forth to push quotes higher?
If you had bet a few borrowed billions, what actions would you take? (And remember, people do not go onto Wall Steet to improve the world. Coin of the realm is money).
For me, the price break, or a long secular decline in fossil oil prices is a matter of when, not if. I sense $100 is near the top. The trader psychology is ruling, and $100 makes sense in psychological terms.
We do have a medium-range problem in that thug states control the majority of the world’s oil. We could even have a backward bending supply curve.
I think this was one factor that stymied experts (and lesser lights like me). We have gobs of oil. If you look at world reserves, light and heavy, you say, “What problem, what crisis?
Peak Oil is a joke. Certainly with price mechanism rationing supplies.
But, we have had whole nations reduce production for reasons related more to thuggism, politics and incompetence, than availability.
Mexico, Venezuela, KSA, Libya, Iran, Iraq, Russia, former SU states.
In effect, we may have Peak Oil, as 2/3rds of the world’s supply is being artificially curtailed. I am not sure, but RR may be calling this “Peak Oil Lite.”
Still, demand is waning. I suspect we have hit Peak Demand now. US motor gasoline consumption is dropping, year-over-year.
The tide is turning, ever so slowly. The good news is that we have seen the worst in terms of oil price hikes (I suspect), and our society is intact. No horror stories (except at TOD).
We have excellent – some truly paradigm-shifting – technologies at the ready, and we don’t even yet have “China prices” on PHEV batteries and solar power panels yet. Imagine when volumes grow, and they start making those products in China.
This is coming, if oil prices are maintained.
I suspect we are about to enter an even better era, in which we obtain a world not only more prosperous but cleaner.
In our children’s lifetimes, internal combustion engines may be removed fom urban areas. Imagine the quiet, the air quality.
well, i’ve been a peak oiler and have been long oil since 2005. um, while, i’m glad oil is near $100/br because i’ve made a ton already. But now, i’m completely out of the market. why? because i think this is unjustified…oil should be $70-$75/br. this thing has become way too volatile and i’m ready to forgoe the next $5 run up of oil into $100 because the downside risk is wayyyyy to large…
So! if me a little puny commodity investor is thinking this…and by golly, it is sooo obvious to me. then all the hedgefunds and CTA’s out there ought to be thinking the same thing, no? what’s gonna happen after oil hits $100? go into full tilt correction mode? well, shouldnt these guys be worried about getting caught in a correction like at $98/br, just before $100? arent the bull speculators competing against each other too not just against the bears?
for me, oil has gotten so high, i’m now shorting it. it’s so obvious to me.
analysts are too much like news folks–excessive hype, insufficient analysis.
the every day market hype/drivel to fill the screen or newsprint space is exessive NOISE in the communication system.
try lengthy analysis with twice/three times/year assessments/outlook.
more frequent is too much.
you are correct–coin flipping has more analytic bases[math + years of observation]
analysts/reporters–try it; it’s based on experience. get more experience, understanding of subject. you’ll love it; go broke in the process, though.
I think looking any more than one day ahead on flat price is an exercise in futility or hubris.
Well, actually, you might have some luck with something longer term, like 6 months. But next week? A myriad of unexpected news stories could change the trend by then, while the underlying fundamentals wouldn’t have had time to dominate.
Disclaimer: peak oil believin’ oil analyst.
Cta,
Over at the oil drum a pair of articles (one two) have looked at the distribution of prices over the last while and both conclude that the current price levels are probably not caused by a speculative bubble.
(Andrew over at ToD)