Crude still dropping

[67hat34c]

Find it odd that crude is still going down, raggers have cut production 2-3 million bbrls per day in last 4 months. World still using oil so why is it dropping so much?

My guess is that , as most of us stated before, it was the traders that ran it up and put a hurting on the world economies. Now the traders are seeing what happened and do not want to make a run on oil until economies stabalize. Guessing they dont want to kill the rest of the securities markets by running up the oil just yet. Also guessing that there is way less money in the market so they dont have it to play with.

[Genesis]

Speculative hot-money following demand beyond supply.

Serious global recessions kill demand. Oil is priced on the margin - you pay for all barrels at the price of the last one you wish to burn at a given point in time.

Had the dollar not collapsed by 15% in the last couple of weeks crude would be under $40. The real risk going forward for oil is to the upside, as we could easily get a currency crisis and treasury market collapse out of what Bernanke did yesterday. If that happens oil will be one of many things that suddenly get FAR more expensive (essentially anything imported will go ballistic)

[spartonboat1]

Speculative hot-money following demand beyond supply.

Serious global recessions kill demand. Oil is priced on the margin - you pay for all barrels at the price of the last one you wish to burn at a given point in time.

Had the dollar not collapsed by 15% in the last couple of weeks crude would be under $40. The real risk going forward for oil is to the upside, as we could easily get a currency crisis and treasury market collapse out of what Bernanke did yesterday. If that happens oil will be one of many things that suddenly get FAR more expensive (essentially anything imported will go ballistic)

Financial Times agrees with all above almost to the word. Re: < $40, that just happend at $37 today, Dec 18.

This is almost a complete repeat on a smaller scale of the late 70's early 80's...oil at $30, for sure going to $50, it did, then economy died (1981-82), and it fell back to $15 for quite awhile. That was 18, check that, 28 years ago, so follows the secular cycle somewhat, if you go for that theory.

[Boatsb]

Did anyone else notice the prices really dropped right after the elections?

Anyone wonder if there was some sort of foul play?

[Finalee]

Financial Times agrees with all above almost to the word. Re: < $40, that just happend at $37 today, Dec 18.

This is almost a complete repeat on a smaller scale of the late 70's early 80's...oil at $30, for sure going to $50, it did, then economy died (1981-82), and it fell back to $15 for quite awhile. That was 18 years ago, so follows the secular cycle somewhat, if you go for that theory.

That was 28 years ago. Adjusted for inflation only, wouldn't you think oil shouls be at least in the $90 per barrell range?

[Boatsb]

Fred you scare me with that $90/barrel number.

I spent a lot of time thinking about this and considering the newer technologies to get it out and the transportation costs dropped with the stupid tankers I feel $30-50 is what the world economy can hold.

When it spiked first we were straining but held on. After a while it became too much and the world economy was stressed to the point that we have had a partial collapse. I think at $90 /barrell there will be no recovery and the price will not matter if no one can afford it.

Cutting production to bring up the price will only make things worse. Cutting excess production will not effect the economy since no one is buying it anyway. The balance between them is the critical part.

[hyperfishing]

Iran, Mr. Chavez and other OPEC nations are in serious economic dodo, so they will cheat on production quotas and sell out the back door, continuing to push crude prices back towards $35 a barrel. Have fun boating with cheaper fuel. My .02.

[oldboat]

since the price of crude is still falling, why is the price of gas going up?
here in livermore, ca the price of gas has gone up from $1.65 to $1.89 in the last ten days. i have read that when commodity prices fall they sometimes overshoot and then stabilize a bit higher. is that it or is there a better reason?

[SKYCHENEY]

Gasoline generally follows crude and that spike will be short lived. You'll probably see gas come back down over the next couple of weeks. The wholesale price was down to about .95, but then it went up. Now it's back to about .97/gal.

[Trojan]

It was said that if crude drops another 10. bucks. The gas price will be under a buck.

BILL