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right, got my shorts and longs mixed up. dig dug dto dxo idonno tia hge
Oil looks to be soft at the open.
This week, many jockeying for positions.
DXO is 2x oil long my friend.
I'm not sure if it could go to zero or not. Suspect it could since it's a derivative. See #msg-33120470
DXO being a double short could go to zero, right?
Cheap Crude: A Flash in the (Oil) Pan
by: Michael Fitzsimmons October 26, 2008
The biggest mistake the United States could make right now is to assume recent weakness in oil and gasoline prices means the energy crisis is over and the US can go back to our old energy habits and policies.
An editorial in Friday's edition of The Wall Street Journal inferred that high oil prices were solely the result of weak US dollar policies which caused a speculatory oil price bubble. The author conveniently neglected to point out that while the dollar did drop roughly 40% since Bush got elected, oil prices went up 500%. The author then recommended US auto companies not use their tax-payer bailout dollars to manufacture fuel efficient automobiles because there would be no market for them with oil under $50/barrel, which is coming (according to him). Notably, the author neglects to mention the role high oil prices played in the current automotive manufacturing crisis as the US big three focused on gas guzzling Hummers and SUVs as opposed to fuel-efficient intelligent design.
Another article in The Wall Street Journal this week tried to persuade people not to buy fuel efficient cars because the money they save on gasoline won't be enough to make up for the increased insurance premiums smaller vehicles require due to safety considerations. In this article, no mention was made of the environmental costs nor of the fact it just may be better for US insurance companies to receive US dollars rather than to send them overseas to Saudi Arabia, Iran and Russia.
What short memories these folks have. It was only a few months ago that oil was close to $150/barrel. Let's look at the facts. Oil is now in the $60s not because of some huge new supply coming on-line. It is low because demand has fallen off a cliff due to extreme worldwide economic weakness.
This is not the 1980s when oil went to $12/barrel due to huge supply coming online. In fact, despite the high oil prices seen in the last few years, and despite the billions spent on exploration and production, worldwide oil supply barely topped 86 million barrels per day. Oil production from Mexico, Russia, Alaska and the North Sea continues to decline due to increasing depletion rates in the mature oil reservoirs. In the last 4 quarters, oil production at US majors Exxon (XOM), Chevron (CVX) and ConocoPhillips (COP) was flat or down.
Other than a handful of large oil discoveries (mostly in Brazil), elephant fields are getting harder and harder to find. When they are found, they are usually in deep offshore waters which are expensive to bring on-line. The era of abundant cheap oil is over. We are entering an era in which worldwide oil supply will not keep pace with worldwide oil demand. It's that simple.
Should we drill, drill, drill? Of course we should. Despite three massive hurricanes in the Gulf of Mexico, there was not one major oil spill or energy related environmental catastrophe. This proves the oil industry has passed the "safety" test and can surely drill safely in the waters offshore California for instance, where the weather isn't even as severe as in the Gulf of Mexico. We should also be drilling in Alaska and any other US territory which holds oil reserves (barring wilderness areas, federal and state parks, and similar areas).
The environmental impact of burning the oil is, of course, undesirable. Such is the price we'll pay for the lack of an energy policy in Washington these many years. Economically as well as structurally, the country is simply not in a position to ignore its oil reserves. Unfortunately, the current economic crisis will delay many oil producing projects the world over. This will merely exacerbate the situation when the next demand driven oil spike occurs, and it will.
Long term, any country that imports 70% of its oil, consumes 25% of worldwide oil supply, and has only 3% of the world's oil reserves must make some serious changes with respect to its energy policy. I'm talking about the United States. The US simply cannot drill its way out of the oil problem. The only solution is a strategic, long-term, comprehensive energy policy as I've outlines here.
There is only one natural gas automobile for sale in the United States: the Honda (HMC) Civic GX. However, it's not available in many states (including mine), is more expensive than the gasoline powered Civic, and the home refueling appliance is sole-sourced, overpriced, and similarly not available nationwide. Natural gas refueling stations for the public are all but non-existent in the US. Meanwhile, oil exporting countries such as Brazil and Iran are hard at work building out their natural gas infrastructure for transportation. The US is simply asleep at the switch. Again.
The war in Iraq has cost the US dearly. Not only did it take millions of barrels of Iraqi oil off the market at exactly the same time China was pumping up demand (and therefore leading to demand as well as geopolitical risk valuation for oil), the war also drained away taxpayer money that should have been going toward alternative energy solutions. I read an article the other day that pointed out that for the price of the Iraqi war, the US could have had a world class healthcare system, a fully funded alternative energy strategy and 10 million Toyota (TM) Priuses in American garages.
It's time for a new president. It's time for a new government. And it is time for new economic and energy policies.
Meanwhile, what is an investor to do in these times? Well, obviously my earlier advice to buy energy has led to much pain (me included!). I did mention in a few of my articles that the only way oil prices would decline appreciably would be if there was an extreme worldwide recession or depression. Well, here we are. Capitalism, as we know it, is on its way out as the US government takes over the financial system. (How ironic considering Bush is a so-called self-described 'conservative Republican'.)
Regardless, one must invest assuming the financial system doesn't completely implode, for if it does, what does it matter any way? We are obviously in a deflationary de-leveraging cycle where cash is king and return of principal is more important than return on principal.
That said, you have a once in a lifetime opportunity to buy oil stocks at deep deep discount prices. When stocks like ConocoPhillips and BP (BP) are valued such that their PE is damn near equal their dividend yield, it is time to buy.
Could oil prices remain low for a year, even two years? Yes, they could. However, at some point in the future (barring a one world government or "new world order"... which is not out of the question), oil supply/demand fundamentals will again take over and we'll have another huge spike in oil prices. ConocoPhillips, Chevron, BP and Exxon Mobil will once again be right there to make huge profits. Meanwhile, an investor can collect the dividend and watch as these companies increase their downstream margins in gasoline refining.
It's funny, but gas in the $2 range does feel cheap after seeing $4 in the summer.
I would be surprised to see it fall below $2.
I bought shares in my fav Oil plays on Friday, only 5% of what I'd like to own in an uptrend. As much as I would like to nail a bottom, I feel these are short term holds and will hold them for a bounce, or stop out(puts are in place). I also have a good chuck of DUG, for some push and pull action,lol.
OXY, XOM, SLB, DIG/DUG and RIG for me.
I also bought some POT, Solar, and select Financials.
With another hard dip, maybe more lotto plays in FRE, AIG and ABK :) I think these need to be battered for another couple of months first though.
I live in the San Diego area. When I see people posting about how much they are paying for gas per gallon in other parts of the country it's always cheaper than the prices here. Yesterday the price took a drop of about a dime from the last time I looked two days ago to $2.96. I honestly never thought I'd see it that low again, but I honestly don't think this will last even a year.
I've seen some of those names before, and I think they have $$ staying POWER to boot.
:)
Solar and Wind are still along ways off, we need a breakthrough in storing energy(vastly new battery tech). I do see these move with Oil with higher % moves.
Bio fuels might have a run, but not in the short term. For most of us, Oil will be the major fuel in our lifetimes, and it will move North again. This down trend will let many get into the Oil stocks, and will lead to BIG $$ down the road, where will Oil be in 3 years, I'd bet higher than it is RIGHT now.
DIG, I have shares, and will keep trading it and hold on to some of the shares long term. Bottom, not yet so play the bounces.
In the short term, I would like to see the market behave like we saw in Jan/Feb for a short term bottom, then the NICE rally in March-May. Overall the tops are lower. The slow decay and slide will take some time, and would expect a move like the .com bubble BURST.
Oil will lead the recovery as demand increases. I'm sort of in the Oil business(motor Oil), and already with the lower gas prices, business is picking UP. :)
No ethanol FOR me.
i agree... commodities should be one of the 1st to spike when the tide turns...
The tyranny of the immediate
Published Oct 22 2008 by The Archdruid Report
Archived Oct 23 2008
The tyranny of the immediate
by John Michael Greer
One of the great challenges that has to be faced in any attempt to make sense of history while it’s happening is the misleading impact of short-term trends. While the late housing bubble was still inflating, for example, soaring real estate values made it easy for most people to fool themselves into believing that it made sense to sink their net worth, and then some, into houses priced at even the most delusional levels. They had seen prices march steadily upwards, month after month and year after year, and that experience made it seem likely that the same steady march would continue for the foreseeable future.
The same mistake on an even more grandiose financial scale underlies the implosion of much of the world’s banking system in recent months. The first generation of derivatives, credit default swaps, and equally exotic financial livestock netted huge profits for their original breeders; so did the next generation, and the next, and before long these dubious securities – valued with an optimism usefully summed up in the phrase “mark to make-believe” – accounted for a very large proportion of the paper assets held by banks, hedge funds, and the like. Because the financial community’s recent experience with such things had been so positive, all too few investors glanced further back and saw what happened every time in the past that financial paper unlinked to sources of real wealth had been allowed to breed beyond the carrying capacity of the market.
The difficulty, as I’ve suggested in previous posts, is that historical change happens at a pace much more leisurely than textbook summaries suggest. Most people who didn’t live through the opening years of the last Great Depression leave school with the notion that when the stock market crashed in the fall of 1929, the economy reached a full stop by the time investors stopped plummeting from Wall Street windows. In reality, it took more than three years for the economy to finish contracting, and scenery en route included a dramatic stock market rally in 1930 and some of the best days of rising prices, in percentage terms, that Wall Street has ever seen. At every point along the course of contraction, furthermore, financial pundits drew false conclusions from short-term changes. The resulting headlines have more than a little similarity to the ones that clutter the financial press today.
This habit of reading too much into short-term conditions has shown itself more than once in the recent economic convulsions, and guesses about the future price of oil – a subject of interest to many peak oil researchers – have been particularly affected. Earlier this year, as the price of oil soared to $143 a barrel, a great many people argued that it would keep on climbing to $200 or $250 a barrel in the near future. Now that the price of oil has slumped below $70 a barrel, the tide of opinion has turned, and some pundits are now predicting a continued slump to $50 or even $35 a barrel. These predictions seem quite plausible at the moment they’re uttered, but then so did the idea that shares in dot-com startups would keep on climbing in value all through 2000.
The problem with linear projections of oil prices is that several factors unrelated to ordinary issues of supply and demand dominate the price of petroleum just now. One of the most important comes out of the crucial but rarely remembered fact that, while oil is priced in US dollars, most of the oil in the world these days is produced and used in countries where the US dollar is not the local currency. Since the value of the US dollar has been anything but stable of late, the price of these transactions in dollars has changed dramatically, while the price in any other terms has remained much more stable.
A barrel of oil for which a Japanese refinery pays 7500 yen, say, would cost US$75 if the dollar buys 100 yen and a bit over US$65 a few months later if the dollar rose to 115 yen. Has oil dropped in price? Only on paper, since the refinery’s bank account changes by the same amount each time. Check out exchange rates, and you’ll find that the period when oil spiked to $143 a barrel was also a period when the value of the US dollar dropped steeply against other currencies, while the plunge in the price of oil since then has paralleled a steady rise in the relative value of the dollar.
Even more dramatic, though, has been the effect of commodity speculation on the price of oil. Those economists who still insist that a completely free market will manage production and price with perfect rationality have apparently done their best to ignore the multiple monkey wrenches speculation throws into the market’s machinery. The crucial point to realize is that the results of speculation, unlike most other economic phenomena, are radically asymmetric over time. It’s worth taking a moment to understand how this works.
Consider a poker game in a tavern back room. Like speculation, poker is not a productive economic activity; instead, it is a means of exchange by which money passes from one person to another on the basis of differences in skill and luck. The results of a poker game, however, are symmetric – that is, in each game, the winnings of the winners are equal to the losses of the losers. You’ll never see a poker game in which all the players win and nobody loses, or vice versa.
Yet this is more or less what takes place in the successive phases of a speculative bubble. While the bubble is inflating, nearly everyone wins; the difference between one tulip bulb, internet stock, or condominium and another during the first phase of their respective bubbles was simply how much money you would make from it, not whether you would gain or luse. Once the bubble bursts, by contrast, nearly everyone loses; if you bought tulip bulbs at the peak of the Dutch tulip mania, internet stocks in 2000, or real estate last year, the question a year or two later was not whether you lost money or not, but simply how much of your wealth was gone.
This is what makes unrestrained speculation so serious a threat to the functioning of market societies: it amplifies the extremes of the business cycle out of all proportion. On the way up, it boosts the funds available for investment as well as speculation, and encourages overinvestment in productive capital by fostering unsustainable levels of consumption; on the way down, it slashes the availability of investment funds, helping to drive the vicious circle of contraction and disinvestment that feeds a recession and can turn it into a depression. Still, damaging as these effects are, they are temporary; sooner or later, every boom turns into a bust; sooner or later, every bust bottoms out and yields to the first stirrings of recovery.
This is exactly the dynamic traced by the price of petroleum over the last two years or so. The price spike to $143 a barrel was driven by many factors, including the first stirrings of a decline in the world’s production of conventional petroleum, but speculation played a massive role. For well over a year beforehand, financial pundits had been touting petroleum and other commodities as surefire investment vehicles, and those who got in early often made a great deal of money as oil prices climbed through 2007. This laid the foundations for a dramatic speculative bubble in the first half of 2008. Not that many years before, the idea that oil might break $100 a barrel was unthinkable to most people, and those who argued for it couched the idea in terms of a “superspike” driven by some international crisis like a US assault on Iran; what happened instead was a classic speculative bubble that zoomed far beyond anything the facts would justify, and then inevitably crashed.
That crash brought the price of a barrel of oil down more than 50% from its all-time high. It’s crucial to remember, though, that the bust phase of the speculative boom-and-bust cycle is just as exaggerated as the boom. Generally speaking, speculative busts in the past have tended to drop proportionally as far below the long-term trend line as the preceding boom rose above it, and then revert to the mean. If, as seems likely right now, petroleum is nearing a bottom somewhere around $60 a barrel, the proportional mean between peak and trough – and thus the rough current location of the mean toward which oil prices will tend to revert – is a little above $90 a barrel. Under normal circumstances, this would be the price toward which oil prices would tend to return over the months to come.
The problem, of course, is that these are not normal circumstances. While the US dollar gains in value against other currencies, as mentioned above, the price of oil will dip accordingly; if the dollar begins sliding again, on the other hand, we can expect price increases. Furthermore, not all oil fields are created equal; some of the production brought on line over the last two years or so pays for itself only when oil is well above current prices, and the likelihood that some of these will be shut down or abandoned – to say nothing of the likely impact of the unfolding credit crunch on drilling and production – make a mockery of any attempt at exact prediction.
The governmental response to the credit crunch and the near-implosion of the speculative end of the economy has its own implications, and these also push the situation away from normal. In a truly free market, the bust would have erased most of the capital that had been available for speculation, and destroyed so many businesses that the survivors would be likely to flee the more exotic realms of finance for a generation to come; this is exactly what happened in the 1930s, for instance. In the present case, though, governments around the world have propped up investment banks and speculative markets with huge inflows of cash, preventing the wave of bankruptcies that would normally end a speculative boom as wild as the one just finished. One very likely possibility is that the investment banks will attempt to launch another round of speculative excess in order to improve their balance sheets before the political consensus that supports them comes unglued; if this happens, commodities are a likely target, and could soar upwards again.
Looming over all these factors is the arrival of peak oil. Since 2005, world production of petroleum has been locked into a narrow plateau that not even a 300% increase in prices could breach, and the most believable estimates suggest that by 2010, that plateau will turn into a slow and irrevocable decline. Many of the official figures for oil production lump biofuels and tar sand extractives in with conventional petroleum; since these latter are produced using large amounts of oil and other fossil fuels, there’s a real sense in which some of today’s petroleum production is being counted twice, hiding any early signs of the approaching contraction. The credit crunch and the low price of oil, furthermore have placed additional challenges in the way of the already difficult struggle to replace the world’s rapidly depleting oil fields.
The obvious implication of peak oil is that the mean price of peak oil is likely to trend upward over time. The less obvious implication is that changes in the mean price may well be hard to extract from the chaotic data provided by an economy in disarray. Thus when peak oil advocates came to believe that the price of oil would soar upwards from $143 a barrel, they were running ahead of the date; when, as now, some of them are predicting a continuing decline in the price of oil for years to come, they are very likely doing the same thing. The tyranny of the immediate makes these short-term phenomena seem much more significant than they are.
My guess, based on historical examples, is that the price of petroleum and other commodities will find a bottom within the next month or two, stay there for a while, and then begin a ragged upward movement as renewed speculation cuts in sometime in the first half of 2009. Radical changes in the relative value of the US dollar could change that forecast, though the trends I’ve outlined might well still be visible if the price of oil is tracked in other currencies; a concerted attempt to reflate the economy by engineering a new commodities boom, that would have an even more dramatic effect, though the impact of rising commodities prices on a crippled economy could be dire enough that the boom might collapse of its own weight in short order. Over the long run, though, investments in energy conservation and less energy-extravagant infrastructure are likely to pay off in a big way – and the long term is what most needs to be kept in mind just now.
Gov. answer - the push for ethanol,“the longest-running scam on the American public.”
Subsidizing the fuel made with the most subsidized crop is insane, Bryce said. The mandates for ethanol use are not just unethical, they’re immoral.
He called it madness to burn food for fuel in the midst of a global food shortage.
The mandates pit ethanol refiners against producers of cattle and poultry, and they lead to higher and more volatile food prices, not to mention more environmental problems and pollution.
Expert: Natural gas is future of U.S. energy
By TED GRIGGS
Advocate business writer
Published: Oct 23, 2008 - Page: 1D - UPDATED: 12:05 a.m.
The United States has enough natural gas resources now to supply the country’s needs for 118 years at the current demand and technology, an energy industry expert said Wednesday.
“Even if we double the rate of consumption, that’s 60 years with the current technology,” said Richard Smead, director with Navigant Consulting Inc.
Smead’s comment came during the LSU Center for Energy Studies Energy Summit 2008. The conference title was “Energy Independence: Myth or Reality?”
Smead said the United States has a tremendous supply of natural gas, and while it may not make the country energy independent, it can certainly reduce imports.
Enormous changes have taken place in U.S. natural gas production in the last few years, he said.
During the first eight months of 2005, the average production of onshore and offshore wells was around 50 billion cubic feet per day, Smead said. In June of this year, the onshore gas production alone reached that level.
“That’s why when we had two hurricanes this year, and they knocked out offshore production, natural gas prices went down,” Smead said.
The onshore production is 8 billion cubic feet per day greater than last year’s federal Energy Information Administration forecast of 42 billion cubic feet, he said. The additional production is the equivalent of all the oil the United States imports from Saudi Arabia, Smead said.
Much of the domestic gas lies in unconventional plays, enormous formations like the Haynvesville Shale centered around Shreveport, Smead said. There are now at least 21 shale formations spread out over 20 states.
There are challenges producing that gas such as connecting fields to pipelines, but those problems are not insurmountable, Smead said.
At the end of the day, the United States has a lot of natural gas, he said. Production is growing exponentially, though it will level off with the credit crisis and falling prices.
Still, 15 years from now, the country could be in position to add 50 percent to its current production level, Smead said.
Even with the expected reduction from wells now in place, the U.S. will still have added 10 billion to 15 billion cubic feet of gas production.
That’s enough gas to convert 20 percent of the country’s vehicles and, again, more than the oil the country imports from Saudi Arabia, Smead said.
He also questioned lumping natural gas production with oil and other energy sources like coal.
“If you believe that coal and natural gas are the same, burn some coal in your kitchen,” Smead said.
Robert Bryce, author of “Gusher of Lies”, said coal was the fuel of the 19th century, oil the fuel for the 20th and natural gas will be the dominant fuel for the 21st century.
In the past decade or so, global gas reserves increased at twice the rate of oil reserves, Bryce said.
While concentrating on natural gas is a good idea, Bryce said the country should abandon the idea of energy independence and embrace energy interdependence.
“The world is getting smaller every day,” Bryce said. “The sooner we accept interdependence, the better off we’ll be.”
Bryce also said the country should abandon the push for ethanol, which he called “the longest-running scam on the American public.”
Subsidizing the fuel made with the most subsidized crop is insane, Bryce said. The mandates for ethanol use are not just unethical, they’re immoral.
He called it madness to burn food for fuel in the midst of a global food shortage.
The mandates pit ethanol refiners against producers of cattle and poultry, and they lead to higher and more volatile food prices, not to mention more environmental problems and pollution.
The desire for energy independence has helped fuel the ethanol scam, Bryce said. But there’s very little growth in the U.S. demand for gasoline.
Meanwhile, the demand for diesel is growing at 14 times the demand for gasoline, Bryce said.
The real demand is in the middle distillates, such as diesel and aviation fuel, the backbone of the U.S. transportation system.
The ethanol scam, Bryce said, is evidence that Congress has intervened too much in the energy industry.
A better solution than mandates and subsidies is to let producers compete on price, Bryce said.
He also recommended increasing domestic energy production by opening the Arctic National Wildlife Refuge and the Outer Continental Shelf.
Top 10 DIG Holdings
Company Name % of Total
Portfolio Dollar Value
(in thousands)
EXXON MOBIL CORP 33.10% $85,398.00
CHEVRON CORP 14.31% $36,919.80
SCHLUMBERGER LTD 9.87% $25,464.60
CONOCOPHILLIPS 9.50% $24,510.00
OCCIDENTAL PETROLEUM CORP 5.28% $13,622.40
TRANSOCEAN INC 3.50% $9,030.00
DEVON ENERGY CORP 3.24% $8,359.20
HALLIBURTON CO 3.22% $8,307.60
APACHE CORP 3.05% $7,869.00
MARATHON OIL CORP 2.86% $7,378.80
Total: 87.93% $226,859.40
Too much DOOM and Gloom in Asia and Europe for the OPEC meeting to affect prices just yet. Looking at pre-market looks bad for DIG, but I don't always agree with the pre-market activity.
Lots of big moves happened over night, so I'm scaling everything back for the opening and padding the cash account.
OPEC Preparing Output Cut to Boost Prices After Slump (Update1)
By Ayesha Daya and Fred Pals
Oct. 24 (Bloomberg) -- The Organization of Petroleum Exporting Countries is preparing to cut oil production for the first time in almost two years to stem a collapse in prices.
Ministers of the 13 nations will gather at 9 a.m. local time in Vienna where Iran and Venezuela, two of the countries most dependent on high prices, will push for reductions.
``Prices should firm up and move higher in the short term'' with a reduction of 1 million to 2 million barrels a day, Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut, said yesterday. ``Unless there is something huge announced, the market will eventually start moving lower again because of the weak economy.''
Crude oil has tumbled 53 percent from a July 11 record of $147.27 a barrel as the financial market crisis spreads, job cuts increase and fuel consumption slows. The International Energy Agency said Oct. 10 that demand among its 28 member nations will fall 2.2 percent this year.
OPEC members have a ``consensus'' on cutting supply, Venezuelan Oil Minister Rafael Ramirez told reporters yesterday in the Austrian capital. An immediate ``substantial'' cut of ``at least'' 1 million barrels a day is needed, Ramirez said.
Iranian Oil Minister Gholamhossein Nozari, representing OPEC's second-largest producer after Saudi Arabia, said yesterday that a 2 million-barrel-a-day cut was necessary because of falling global demand.
``Who said anything about a cut?'' Saudi Arabia's Ali al- Naimi said when asked whether he supports a possible reduction in output. ``Prices will be determined by the market,'' al-Naimi said, declining to elaborate.
Excess Supply
The continuing decline in demand may lead OPEC to discuss a two-step cut, with the second part implemented after OPEC meets again in Algeria in December, ministers from Venezuela and Qatar said. The group's president, Chakib Khelil, said that the OPEC will ``most probably'' lower production and prices between $60 and $90 a barrel won't worsen the global economic slowdown.
``There is an excess of supply definitely, there's an excess of stocks in the market,'' Khelil, who is also Algeria's oil minister, told reporters in Vienna yesterday. ``We have a recession, we have falling demand.''
Tumbling stock markets signal that the financial turmoil may affect emerging markets, the center of oil demand growth. Gross domestic product in China, the world's second-largest energy user, grew 9 percent in the third quarter, the slowest pace in five years.
Target Price
The United Arab Emirates, OPEC's third-biggest producer, is ``very concerned about the steep decline'' in prices, Oil Minister Mohamed al-Hamli said. OPEC pumps more than 40 percent of the world's oil.
Crude oil for December delivery closed at a 16-month low of $66.75 a barrel in New York Oct. 22 as Argentina's seizure of pension funds rattled markets around the world. Oil gained as much as $1.66, or 2.5 percent, to $69.50 in New York today.
``We're talking about how much the cut is going to be and this is what we will discuss at the ministerial meeting tomorrow,'' Kuwaiti minister Mohammad al-Olaim said in an interview after arriving at Vienna airport yesterday.
``Of course we will back a production cut,'' Venezuela's Ramirez said in an interview. ``It is obvious that there is consensus within OPEC nations that we need to cut immediately this year and evaluate in December to see if there's need for a cut in early 2009.''
The group may discuss reinstituting a target price range to defend oil at between $80 and $100 a barrel, Ramirez said. OPEC years ago abandoned an earlier ``price band'' of $22 to $28.
Meet Quotas
Crude has declined from its July record as demand for fuel started to stall. U.S. gasoline demand averaged 8.8 million barrels a day over the past four weeks, down 4.3 percent from the same period last year, a government report showed Oct. 22.
The last time OPEC decided to slash quotas was at a December 2006 meeting in Abuja, Nigeria. The 500,000 barrel-a- day cut took effect in February 2007, expanding an earlier reduction agreed in October. The cuts were reversed later in 2007 as oil rallied.
At a meeting last month, OPEC urged greater compliance with existing quotas, saying that would reduce supply by about 500,000 barrels a day. OPEC members excluding Iraq and Indonesia last month pumped 390,000 barrels a day more than their combined quota of 28.8 million barrels a day, according to Bloomberg estimates.
Russia seeks co-operation with Opec
Nick Coleman
--------------------------------------------------------------------------------
http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A868982
Sapa-AFP
MOSCOW — Russian President Dmitry Medvedev told the Organisation of Petroleum Exporting Countries (Opec) secretary-general yesterday he wanted closer co- operation with the cartel, as Russian officials focused on falls in the price of crucial oil and gas exports.
“For our energy institutions, co-operation with Opec in forming energy policy is a key priority,” Medvedev told Opec secretary-general Abdalla Salem El-Badri, who was in Moscow before a meeting on Friday at which Opec is expected to cut output.
“Russia is also a major producer and exporter of oil and is interested in supporting stable, predictable oil prices,” Medvedev said.
Earlier, the Opec secretary-general said he would not ask Russia, which is not a member of Opec, to join any arrangement to support prices.
“I will not ask Russia to cut production. I will request an exchange of information about the situation on the market and the financial crisis,” he said.
Medvedev’s comments came a day after Russian, Iranian and Qatari officials met in Tehran to push forward plans for an organisation of gas producers dubbed a “gas Opec”.
Newspapers and analysts said Medvedev’s meeting with El-Badri and the gas producers’ meeting in Tehran were signs of Russian concern that falling prices could damage the country’s heavily oil- and gas- dependent economy.
But there was widespread doubt about the scope for effective co-operation. Energy analyst Valery Nesterov, of Moscow investment bank Troika Dialog, played down the extent of Russian cooperation with Opec, noting that yesterday’s meeting was the latest in a series of sporadic contacts. “I don’t see anything special or specific.
It’s just an exchange of information,” said Nesterov, noting the distinctiveness of Russia’s oil industry, where production is in a gradual decline.
The Russian broadsheet Kommersant poured scorn on talk of a “gas Opec” , although it suggested that it would suit Russia if talk of such a cartel helped drive up oil prices.
The newspaper pointed to fundamental differences among the three countries at the centre of the planned gas producers’ organisation.
“Unlike Russia and Qatar, Iran practically doesn’t export gas, and Qatar, unlike Russia, has made a commitment to exporting liquefied natural gas.... Thus, there are practically no joint projects or common interests between the three,” the paper said.
“People who know just a little about the gas market dismiss such games,” it quoted one analyst, Mikhail Krutikhin, as saying.
Russia and its markets have been badly hit by the global financial crisis, with the authorities forced to intervene to support the rouble, provide credit to banks and buy shares in affected businesses.
Medvedev has blamed the US for the world’s financial ills, but critics say Russia has failed to diversify from oil, gas and other natural resources sufficiently , leaving it vulnerable to price fluctuations for such commodities.
The world financial crisis and falling oil prices had exposed Russia’s vulnerability to banking problems, commodity prices and private sector debt, ratings agency Fitch warned yesterday. It said foreign exchange reserves of $531bn left the state relatively well placed but that the indebted private sector and recent capital flight posed threats, although the rating was safe. With Reuters
I'm just now getting my feet wet with options. Still don't have it down well enough to do on my own so I use a service and wait for the plays.
--DIG oversold--
% From 52-Wk High ($ 131.08 ) -336.93 %
% From 52-Wk Low ($ 22.65 ) 24.50 %
% From 200-Day MA ($ 91.24 ) -204.13 %
% From 50-Day MA ($ 56.48 ) -88.27 %
Price % Change (52-Week) -74.70 %
Trading Volume - Average 4,527,000
Trading Volume - Today vs. Average 671.24 %
Record up volume today. I like what I'm seeing...
wish I could trade DIG/DUG in my Thrift Savings Plan...
Regards,
frenchee
#board-4258 TSP Trend Timing: EFA (I), TLT (F), SPY (C), and $EMW (S)
Russia, Iran and Qatar announce cartel that will control 60% of world's gas supplies
Thanks to Tekno for the link.
http://www.blacklistednews.com/news-1985-0-13-13--.html
Nut's on the futures. With the big spikes I'm sure many pull the trigger and lock in some profits. I like to sell the entire move, and it's nice to have a chunk left when the spike hits.
It's a traders market, so have fun with the stocks. DO you you buy options as well? It's always nice to have other ways to play.
:)
Seems we're getting a number of EOD short squeezes in the last hour lately. Futures have handed me my ass on a golden platter the past few days, so I'm back to stocks until the volatility calms down. It's like playing with a room full of schizophrenics trying to make up their minds!
Take care.
Rich
The market and DIG making an EOD move, it doesn't feel really strong, but the volatility is good.
DIG might ROCK tomorrow.
Natural gas storage supplies starting to roll over...
http://americanoilman.homestead.com/GasStorageGraph.html
The American Oilman http://americanoilman.homestead.com/Home.html
Your logic is sound and I hope you are correct Brad...
DIG is starting to cycle, and it's neck and neck in % gain with DUG, I've been shifting to weigh more into DIG for Fridays momo.
Other Ultra short ETF's FXP, SKF, and TWM still rocking, Oil should be the first to turn, and is an early market indicator.
DIG's turn I believe.
Long-term oil chart with Fib Retracements shown
http://seekingalpha.com/article/101220-oil-chart-with-fibonacci-retracements?source=email
IRAN said they need the price of oil at $80.00 per barrel!!! That is up $12.00 from current levels!!! Tomorrows OPEC meeting is for sure going to raise the price of barrel for sure with IRAN screaming $80.00 per barrel!!!
Five day 15-minute chart of DIG.
Currently an inverse head and shoulders pattern forming with gap resistance between 32.50 and 33.63...
Live oil pricing chart #msg-33047411
The shorts got it today...those in under $30 will have a nice return I believe. No way they keep oil this low for long.
OPEC faces tough test as oil price tumbles
http://www.iht.com/articles/2008/10/21/business/opec.php?page=1
The 24th is EOW, pressure is being applied.
:)
Some will be chasing DIG into 40's but who am I to complain?
mb
Enjoy DIG.. the program is about to begin as the players look for cheaper oil in the ST.
Oil Boomage? Maybe not but firmation? Oh Yeah!
DIG long... DUG to fall.
mb
thx bud, it sure did... very nice!;')
I use TD Ameritrade because I'm too cheap to use real time Stockcharts.com. The Stockcharts chart was to illustrate the point that the 20-period EMA works well...at least the last week.
very nice, why not just use the center bollie line and take the ema20 out...
I've been trading it with the 15-min charts this week. 20-min price EMA has been an excellent buy/sell indicator. Buy when the 15-minute close > 20-min EMA. Vise versa for the sell. Check it out...
Regards,
frenchee
#board-4258 TSP Trend Timing: EFA (I), TLT (F), SPY (C), and $EMW (S)
Crude will be in stealth mode!
DIG saw $23.50 at low ...from there the tide is turning.
Respect a firm oil price now.
mb
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