The Myopic View of Oil Editorialists.You've seen them pop up every where anytime oil drops thirty cents or a couple of bucks, suggesting that crude is in a tailspin. That spot price view cracks me up every time. The common mistake investors make is to watch the spot prices hour by hour and try to make a call months down the road. Supply and demand should dictate pricing but it doesn't. Unfortunately mainly large oil "paper" traders are influencing crude prices, and it is no doubt in my mind that is what to a large degree is keeping oil prices inflated. Have oil prices survived?
1)Let's take a look at where oil prices have been.
Oil was trading around $70 a barrel one year ago at this time (Apr.3) , and now at around $100, I would hardly call that a downtrend, and roughly $65 five years ago. Sure oil has had it's ups and downs but longer term the path is clear.
2) Slower U.S. demand for 2008
Not so sure about this. U.S gasoline stocks have fallen recently, and my explanation is that most U.S. refiners are still in maintenance mode (although some now are starting to gear up production). It remains to be seen if North America continues it's addiction to the automobile or not during the summer driving season.
3) Worldwide demand increasing.
Without a doubt. Even China has shown gasoline and diesel shortages recently as they gear up for the games.
4) Mortgage Meltdown
During the crash of the last U.S. investment bank collapse the huge commodities sell off dropped oil prices to about the $98 level. However inflated oil prices are back to $100+.
My conclusion is that oil prices so far have survived mortgage write downs, commodities sell off, predicted economic slowdown, and general market gloom and doom.
The upside to oil prices this summer in addition to the above are obvious. Tin pot dictators, global insecurity, hurricane season, and the list goes on.
Companies with proven oil in the ground (even our tiny Goldnev) should bode well for their shareholders.
. Without a doubt. Even China has shown gasoline and diesel shortages recently as they gear up for the games. During the crash of the last U.S. investment bank collapse the huge commodities sell off dropped oil prices to about the $98 level. However inflated oil prices are back to $100+.My conclusion is that oil prices so far have survived mortgage write downs, commodities sell off, predicted economic slowdown, and general market gloom and doom. The upside to oil prices this summer in addition to the above are obvious. Tin pot dictators, global insecurity, hurricane season, and the list goes on. Companies with proven oil in the ground (even our tiny Goldnev) should bode well for their shareholders.
But beware of those "analytic" prognosticating doomsday writers. Me I'll be counting my money. rich47.