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I will continue to keep my eye on re-entries ... we are on a short term spike with oil!
Made a fair amount today on DUG ... oil drops we go UP!
EVERYTHING I POST IS MY PERSONAL DD!
DO NOT BUY/SELL BASED ON MY DD IT IS MY OPINION AND I AM ENTITLED TO EXPRESS IT ... FOLLOW THE $$!
humm, if iran shooting off rockets can't sustain an oil rally, maybe it might finally be turning negative????
two weeks ago it that news would have shot oil up 10 bucks.
Anyone that wants to chat about short ETF funds drop by this iBOX, I have listed some of the short ETF funds to make it easier to discuss them without having to drop by all the short ETF iBoxs.
surf
http://investorshub.advfn.com/boards/board.aspx?board_id=2754
I've gone "big bear" on any reversal in the overall market. When oil sold off today and the markets sold off, not a good sign for the DJIA, SP500 and NASDAQ. I would stay long DUG and sell any rally in the larger indices. I will be going big time short if we get a nice rally in the overall market.
surf
surf's up......crikey
nice move in dug last week or so surf, nice call.
take care.
TREND1,
I know you get the report but here is a segment from Bob Brinkers latest update,
"...We expect investors to value these earnings at a multiple of 16.5 to 17 times during the second half, bringing the S&P 500 Index into the 1400's range."
George.
gtsourdinis
Sorry for mis leading you.
Right now I am just trying different things with DUG.
It takes me about a year before I have a system for a stock
or EFT.
(1) I have a no loss system for SDS see
http://beta.investorshub.advfn.com/boards/board.aspx?board_id=11081
(2) I have a working system for SDS with losses see
http://beta.investorshub.advfn.com/boards/board.aspx?board_id=11585
(3) There is no such system for DUG at this time.
Right now just showing that I am looking at monthly,
weekly,daily,60 min,30 min , 15 min and 3 min charts
trying to develop a system.
All Charts are only posted on Board below
http://investorshub.advfn.com/boards/board.asp?board_id=11585
You posted a chart on 6/24 buy for $27.25 and that wasn't anywhere close to a buy on your chart post #134. I am only trying understand the rational based on your system not on gut feeling!
George.
gtsourdinis
The charts do not show where I bought and sold DUG.
...more later
TREND1,
You bought "DUG" on speculation even though your system shows that is close to the upper (sell) line?
George.
trades like an ETF in regular hours and no extra expenses but here is the http://seekingalpha.com/article/81776-deutsche-bank-and-powershares-team-up-for-new-etns-rebrand-existing
DTO:Interesting.
Will look into it.
Do you know hours of trading ?
Taxes on trading ? Since it seems to be ECN ?
All Charts are only posted on Board below
http://investorshub.advfn.com/boards/board.asp?board_id=11585
DTO is a better double short crude
LES_DUG_6_25_08
Made 4.8% on my first trade in DUG.
This is getting very interesting.IMHO.
The table below is based on Les's system.
...more later...
.
All Charts are only posted on Board below
http://investorshub.advfn.com/boards/board.asp?board_id=11585
***DAILY_DUG_1
Have taken position in DUG after watching
CSPAN congress meeting on oil prices.
.
I went to 10% of my holdings in DUG, I usually don't place that % of my funds in any one position, but I have now gone from DUG being a hedge to a position of "oil will break". The only issue remaining is will there be a "super spike" to complete the oil top and that is a risk. If we get the "super spike" I will then look at adding to my position and more than likely would do just that.
surf
Hi frenchee...several on my board were perplexed by the DIG and DUG moves on Friday, too
Anyway, I did a little more looking and thought you might like to see my conclusions...
and good luck next week in the oil patch:)
ico
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=29871605
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=29871765
The odd pricing happened in DIG too...
lol yes I guess today in the commodity of oil u can have ur cake and eat it too !!!!!
should be real interesting next week !!!
Oil up 10+ and DUG is up over 3%? DUG is supposed to show an inverse of 200% of oil prices, I'm glad it didn't. It makes you question how/why this took place today.
well I am long the QID and long DUG ...
so far the QID's are winning lol
these chart look top'e but looks can be deceiving
The DUG is hanging in there, you would believe that this is the "parabolic spike", oil will drop and the economy with it. This will drive the "old USofA" down harder the longer it stays up at these levels. It's always the same "chicken or the egg"!
surf's up......crikey
blow off top in OIL ????
I for one have no idea lol
Crazy trading, oil up nearly $7 and DUG is up a quarter!
i just picked some up as well.
take care.
I added some DUG today, now the anal-lists see a stronger econ and oil prices heading back up, they are always late to the game(the oil top is in for now, short term it can go anywhere)
does this sell off seem a little overblown to you?
thinking about jumping in.
take care.
Looks at if the oil drop has started, it should go down further than everyone says it will. DUG hopefully will be up over $10+ to near $40 within a month. Last week may have been the parabolic spike I was looking for in oil.
surf's up......crikey
frenchee here is a yahoo list of the 86 companies in the DJ U S OIL and Gas Index which DUG follows
http://finance.yahoo.com/q/cp?s=%5EDJUSEN
out if the 86 there was 4 that was green
yes very nice candle today
This week DUG has seen the largest volume in it's trading history. Today oil was up over $5 and DUG had a nice big up closing hammer on the charts. I will be adding to my 5% DUG position on any big drop, the few DUG bounces have been trading blips, but maybe soon a real reversal.
Also, today I noticed the largest volume in the airline stocks in the past year. I hate airline stocks and rarely buy any, today I bought AMR as an oil reversal trade(1st airline buy in 3 years & 18% of AMR stock is short) Did the same with WNR, again a play on lower oil prices(22% of WNR stock is short)
surf
Falling Off an ETF Seesaw ( so much for the smart money)
It sounded like a can't-miss idea: a pair of exchange-traded funds developed by a celebrity economist to track crude-oil futures.
One lets investors bet oil prices will rise, the other that they will fall.
But in recent days, creator MacroMarkets LLC announced the funds would terminate at the end of June, cashing out shareholders. This fizzle, after a year-and-a-half run, is one of the highest-profile embarrassments for the growing ETF industry over the past year.
Turns out the funds, the brainchild of famed Yale economist Robert Shiller, were too smart for their own good.
These ETFs, known as MacroShares Oil Up and MacroShares Oil Down, are baskets of assets that trade like stocks.
But they have a unique structure, which was designed to spare the funds the headache and cost of owning the actual commodities.
Instead of owning oil futures as most of its rival ETFs do, the two funds invest in short-term securities such as Treasurys and are equally collateralized at inception.
The two funds were designed to act like a seesaw. When oil rose, the securities would move from the Oil Down ETF, lowering its value, into the Oil Up ETF, raising its value.
The problem was, oil prices were about $60 a barrel when the funds made their debut in November 2006. When oil approached $120, the Oil Down ETF was almost out of money, and the funds' automatic early-termination trigger kicked in.
Under MacroShares' limits, should the settlement prices of Nymex light, sweet crude-oil-futures contracts rise to or above $111 for three consecutive trading days, then the twin ETFs must be dissolved.
That happened in April. Thus their final trading day will be June 25, with the final distribution made on July 3.
Many Oil Up investors could have done better elsewhere. U.S. Oil Fund, an ETF that similarly tracks West Texas Intermediate crude oil but without the complex structure, is up 102% in the past year, compared with 60% for the Up fund shares.
Meanwhile, holders of MacroShares Oil Down have gotten slammed, down 84%, as oil prices have surged.
MacroMarkets says it stands by the paired structure, saying it can help trade unique indexes and avoid hidden counterparty risk.
Its chief executive, Sam Masucci, has said that the products' $300 million in assets and trading volume of over three million shares per day "clearly demonstrate the market's acceptance."
Their creator, Mr. Shiller, didn't respond to requests to comment.
Partly thanks to their complex nature, the funds have been star-crossed from the beginning.
First, they had difficulty finding specialists to help trade them on the American Stock Exchange. Then the funds lost their original marketing agent, Claymore Securities.
The twin ETFs' prices stayed flat for much of 2007, even as oil went higher. Only late in 2007 did the shares start moving, as oil's ascent accelerated.
Trying to entice more investors, the sponsor split the shares, three for one, which made them more affordable.
When the Up shares are redeemed in July, investors who got in early will likely make some money.
They will be cashed out based on the underlying value and not at the lagging price of the ETF.
Anyone buying in now could make as much as 5%. For the Down shares, it's the opposite: Investors in that ETF stand to lose money.
"About the only redeeming feature of the controversial MacroShares" is "that they automatically blow up" at a certain oil-futures-contract price, wrote Greg Newton on markets Web site Naked Shorts recently.
Looked Good on Paper
MacroShares executives disagree. The idea of a commodity-linked ETF would seem to have great allure: It is cheaper, more convenient and less risky than playing with futures.
Staying in the futures game means a contract must be rolled over several times a year. And the chances of losing everything with futures are daunting.
Amid stalling ETF issuance, commodities products are one bright spot. This year, commodity-ETF assets have grown 22% through March to $31 billion, according to State Street Global Advisors. Deutsche Bank AG launched four more exchange-traded notes linked to its proprietary commodity indexes recently.
New Versions
So an undaunted MacroMarkets will try to launch new versions of the Up and Down shares based on 2008's higher oil prices. In addition, the firm is developing a separate pair of securities tracking the cost of medical inflation.
The new generation of $100 Oil Up and $100 Oil Down shares also will be susceptible to a forced closing if oil hits $185 or more for three days, or dips below $15.
Blowing through the ceiling again isn't too far-fetched. Goldman Sachs Group Inc. analysts are predicting that oil could reach as high as $200 a barrel this year.
Adding to my 5% position in DUG if we get a parabolic spike in oil, but the big spike may not come for now and oil may rollover again for a near term sell off.
Hmmm...will we see $5 gas first? or $3. Right now we are at $4/gal. Saudi Arabia is coming in before we go too far to the alternative....but, I think its too little too late. Here you go...enjoy the pics.
a different opinion ....
Energy’s Prevailing Winds
By Philip Klein
Published 5/16/2008 12:08:08 AM
This interview appears in the May 2008 issue of The American Spectator. To subscribe to our monthly print edition, click here.
T. Boone Pickens has spent a lifetime in the oil business. Shortly after graduating from Oklahoma A&M (now Oklahoma State University) in 1951, Pickens went to work for Phillips Petroleum. In 1954, he borrowed $2,500 and joined with two other investors to start a domestic oil and gas company. The business would eventually become part of Mesa Petroleum, which Pickens built over several decades into one of the largest independent natural gas and oil production companies in America. He left Mesa in 1996.
Pickens, who turns 80 this May, is still hard at work running his multi-billion-dollar energy hedge fund, BP Capital. But the legendary oilman, who built his fortune by placing timely bets, is now looking at alternatives. Last year, Pickens correctly predicted that we would be seeing a $100 barrel of oil, and he recently announced plans to build a $10 billion, 150,000-acre wind farm in the Texas panhandle, which would be the biggest in the world.
Through the T. Boone Pickens Foundation, Pickens has become one of the largest philanthropists in America, having donated $600 million over the course of his career to medical care, education, and college athletics. He also is the benefactor of The American Spectator's Young Journalism Training Program.
TAS reporter Philip Klein spoke to Pickens over the phone about his views on the future of energy.
PHILIP KLEIN: Why is it so important for America to develop alternative sources of energy?
T. BOONE PICKENS: According to the crude oil report, as of today [March 12] we have imported crude oil at the cost for $1.4 billion for the week. Multiply 52 weeks times $1.4 billion [a day]. You'll get right at $600 billion a year you're paying for imported crude oil. We can't keep doing that. It's the greatest transfer of wealth ever recorded in the history of the world.
PK: What would you say to free trade purists who say it's not a big deal to purchase products overseas?
BP: You can say it's just free trade. You're just buying somebody else's products. I understand that argument, but if you're going to continue to do it as you have in the past, then in ten years you're going have to burn up $6 trillion.
PK: In the 1970s oil was very expensive, then it went back down. In the late '90s we had very cheap oil. Why can't that happen again?
BP: That will never be repeated, because we've had a fundamental change. The world's oil production has peaked. Now supply is capped at 85 million barrels a day and demand is growing. We've never seen that before. It's also going to be declining at a rate probably of 6 percent a year. This time next year you're probably going to have 80 million barrels a day.
It's unlikely that growing production can ever happen. What you're really focused on is even maintaining production at 85 million. You're going to have to replace 5 million barrels a day every year.
PK: What about discovering new oil or drilling in Alaska or in the oil sands?
BP: I don't think the ANWR is going to be released to be developed, but you're familiar with the transportation of crude oil off of the North Slope in the pipeline area. Do you know what the capacity of that is? Some people have the idea that ANWR could solve a problem for the United States, which is ridiculous.
ANWR, they try to compare to Prudhoe Bay, an oil field where the ultimate recovery out of it is 14 billion barrels. It's depleted substantially. At one time that field could fill that Alyeska line, which is 2 million barrels a day. Keep that in mind, that's all it is: 2 million. That has now declined to about 700,000 barrels a day and they put in satellite production from Endicott and other fields around Prudhoe Bay. But they've pretty well gutted everything that's available to go into that line.
It's unlikely that ANWR will be as productive as Prudhoe Bay. Probably a third as much. But let's just say it's as productive. All that oil coming off of ANWR does is fill up that line. You go back to 2 million barrels a day. We're importing today 14 million barrels of crude and products in the United States, using 21 million barrels of crude and products. So, the 2 million barrel Alyeska line would be 10 percent of what we use every day. It has no hope of solving many problems for us.
When you go to the oil sands, you should focus on a recent announcement to build a line from the oil sands to the west coast of Canada. That is a 528,000-barrel-a-day line. The plan is to move that oil into the Asian market. We haven't even moved ahead in the United States to make sure we capture everything coming out of the oil sands.
The cost of the oil sands is incredibly high but necessary. So all those projects in oil sands run up costs several times what they were originally estimated to be. So, you can't just go in and develop the oil sands. The oil sands is a manufacturing/mining operation. It has a huge amount of manpower necessary, equipment, everything else and I think the oil sands now are producing somewhere around 1.3 million barrels a day.
You don't have the option of just turning it on or anything like that. It takes years. And ANWR could not go on production for instance if Congress passed something that would allow entry into ANWR in the next session, it would take ten years to go into production.
PK: So even if we find different sources of oil in different parts of the world, it will take a long time to bring that oil online and difficult to transport it?
BP: That's exactly right. To do anything more than 85 million barrels a day is probably hopeless.
If I were the United States, it would be very disturbing to me to see anybody thinking about transporting any oil from North America to Asia. We let ourselves down if we don't capture that. Now you've got the Democrats talking about taxing it all and they have got the Canadians stirred up [on NAFTA] that they're going to change that. Canadians don't like to hear that type of conversation and the people of the United States who are doing the talking about it don't understand energy, because the last thing you'd want to do is to be at odds with Canadians on NAFTA and have some of that oil cut off from you and let it go to Asia. The Canadians are openly discussing this. They don't like NAFTA changes that the United States has talked about.
PK: The New York Times reported that you are going to build a new 150,000-acre wind farm for $10 billion. Why are you so bullish on wind power?
BP: What are my other choices? There's only one source of energy that's going to make a substantial difference for this country, and it's wind. It's renewable, it's green, there's no question it will work, and it's being developed very aggressively now in Texas, western Oklahoma, Kansas, and up in the Great Plains. For the next ten years, America will need about a 15 percent increase over the amount of energy that our country uses now. Where is it going to come from? It could come from wind. The government would have to give access, right of way, to move that, but you'll be able to put that huge wind area in the central part of the United States to work. It would rejuvenate the Great Plains. Go look at what has happened in Sweetwater the last three or four years. That could be replicated all the way from Sweetwater to the Canadian border. At the same time there is a wind and solar corridor that would extend west of Sweetwater, Texas, to the California corridor.
PK: How is planning on the wind farm coming along?
BP: We're under way. We have leased the land, we'll put turbines under contract next month, and the question is, where do you take the power? One option is to go to the wind area in the panhandle of Texas, which is one of the best wind areas of the United States, and move it down to ERCOT (the Electric Reliability Council of Texas) about 250 miles south of us, or we might move it to the West Coast.
PK: How difficult will it be to transmit that power?
BP: Transmission has got to be solved, there's no question about that. We feel that we've got it solved if we move it to ERCOT from the panhandle, we have a right of way that we're working on at the present time. California is a bit more difficult, but transmission has got to be solved. If this country wants to take care of their energy needs and requirements, they're going to have to make some of this happen.
PK: Is it difficult to build transmission lines more because of zoning and energy regulations or because of the amount of capital needed for the initial investment?
BP: Well, if you're going to put turbines under contract, you're going to have to transmit the power. We're okay to transmit in Texas. We have that solved. As for the rest of the country, you're going to have to have some leadership come forward or this is going to be a disaster for us.
PK: What should the government's role be in all of this?
BP: I'd say in going to renewables, they'd need to have a production credit in place for a number of years, not renewing it every two years. That doesn't get the interest into it that you need to have, because people are frightened that they're investing in something that they can't get help on. So you need the production tax credit on wind. And you need to free up the right of way.
PK: In Congress, "alternative energy" often translates into ethanol subsidies, or other pork barrel spending projects. How much of the move toward alternative energy is going to have to be aided, at least in the short term, by government subsidies? Why won't companies see it in their interests to invest in alternative energies without government help?
BP: There's no question you're going to have to have the production tax credit. That's a must, because it can't stand alone without it. You're better off to create jobs at home, and recycle the money. I was against ethanol originally, but hell, I'd rather have ethanol than I would Saudi oil. They're the number two provider after Canada. They're selling about 1.8 million, 2 million barrels a day to us. Ethanol is not going to solve it. Nothing is going to solve the problem for us, because we've got such a huge appetite. We're now importing 62 percent of our crude oil. Out of the 85 million barrels a day the world produces, we're using 25 percent of it, with less than 5 percent of the population.
PK: What are your thoughts on solar power?
BP: Don't know anything about it. I just said there's a corridor for solar power from Sweetwater, Texas, to California across Arizona, New Mexico, and the California border. We're not in any solar power projects. But these are the kind of things that somebody in government is going to have to get involved in and make something happen. The country is desperate for leadership on energy. I don't think any of these politicians running for the president of the United States even have a clue we're up against.
PK: What about nuclear power? Do you think licensing more nuclear power plants would be a good option?
BP: I'm for nuclear power. We should do it. We should do everything, because we need energy from all sources and get away from what we're doing, importing so much crude oil. But, being a geologist, I have some concern over whether you've got uranium available to you.
I think the greatest source of uranium is Russia, and they're no friend. And then you look at the two largest oil producers in the world, it's Russia and Saudi Arabia, and the two largest natural gas producers, and it's Russia and Iran, and the two largest importers of oil are the United States and China. So, you're in a bad spot, and you have to get some leadership in getting this country off of the imported oil as our primary energy source.
PK: What are some of the more promising alternatives that are out there to power automobiles?
BP: The obvious one is natural gas, and natural gas is a domestic fuel. So, anything you can replace with natural gas as far as diesel gasoline is concerned, you cut down on the imports, and natural gas is a cleaner, cheaper fuel that's available. That infrastructure should be developed. It doesn't need much in the way of help from the government.
You've got to try to develop everything. You don't push anything off the table now. You just have to go balls-out to get it done, and get off of this crude oil. I just can't believe, I keep saying this. It's just a huge outflow of wealth from this country.
PK: People have been talking about alternative energy since the 1970s. What is different now?
BP: In the '70s, there wasn't a shortage of oil. Whenever oil would go up, and activity would start in alternatives, they would make more oil available, and drop the price. It would stop all of that activity. It's entirely different today, because you've peaked on the oil. In the Mideast, they can't give you any more oil than they're giving you. The game has changed.
PK: Do you think that now the technologies exist that make things more achievable than they were back when we were talking about energy alternatives in the 1970s?
BP: Sure, they're more achievable, because the price is better. Of course, the cost of development has gone up dramatically too. The only way you're going to kill demand is with price. But back in the '70s, you were taking a chance with alternatives, believing that oil prices were going to go up. When activity would start up some place, OPEC would just provide more oil and drop the price. Those days are gone.
This interview appears in the May 2008 issue of The American Spectator. To subscribe to our monthly print edition, click here.
http://www.spectator.org/dsp_article.asp?art_id=13223
Saudi to Boost Oil Output by 300,000 Barrels a Day (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6HAI8EIrTGQ&refer=home
By Janine Zacharia
May 16 (Bloomberg) -- Saudi Arabia, the world's largest oil exporter, will increase crude oil production by 300,000 barrels a day next month in response to customer requests.
The country will pump 9.45 million barrels a day in June, Saudi Oil Minister Ali al-Naimi said in Riyadh today, following a meeting between U.S. President George W. Bush Saudi Arabia's King Abdullah. Earlier today, U.S. officials including National Security Adviser Stephen Hadley had said Saudi Arabia's policy was to supply extra oil only if customers needed it.
``On May 10 we increased our response to our customers by 300,000 barrels because they asked for it,'' al-Naimi said. ``So our production for June will be 9,450,000 barrels per day. This is the request of about 50 customers worldwide.''
Oil prices have doubled in the past year on surging demand, supply disruptions in places such as Nigeria and commodity purchases by investors as a hedge against a weakening U.S. dollar.
Crude oil futures traded in New York rose to a record about one hour after Bush landed in Saudi Arabia earlier today. They later climbed as high as $127.82 a barrel, and last traded at $126.05.
``As far as the U.S. is concerned, most of the 300,000 came from the U.S. and we responded to it on May 10,'' al-Naimi said.
The Saudi oil minister said Bush was satisfied. ``He was because our response is positive. If you want to move more oil you need a buyer,'' al-Naimi said at a press conference at the Saudi foreign ministry in Riyadh.
Saudi Arabia, biggest producer in the Organization of Petroleum Exporting Countries, pumped 9.12 million barrels of crude a day in April, according to Bloomberg estimates.
To contact the reporters on this story: Janine Zacharia in Riyadh at jzacharia@bloomberg.net.
Energy Dept to stop shipping to oil reserves in July: report
By Sue Chang
SAN FRANCISCO (MarketWatch) -- The Energy Department canceled oil shipments into the Strategic Petroleum Reserve beginning in July when the current purchase contract expires, the Associated Press reported Friday. The Energy Department will not sign contracts for new shipments of 76,000 barrels of oil a day for the six-month period beginning July 1, the news agency said. The reserve is 97% full, holding 701 million barrels of crude.
Goldman play the oil market like they did the subprime???
140 dollar oil will hurt a lot of people in the states and should kill the oil market here also...
Goldman Raises Second-Half WTI Oil Forecast to $141 (Update2)
http://www.bloomberg.com/apps/news?pid=20601072&sid=aBgHsyAv_E9Q&refer=energy
By Stephen Voss and Alexander Kwiatkowski
May 16 (Bloomberg) -- Goldman Sachs Group Inc., the world's biggest securities firm by market value, raised its New York crude-oil price forecast for the second half of this year by 32 percent, citing supply constraints.
Goldman now forecasts West Texas Intermediate, the benchmark crude grade traded in New York, will average $141 a barrel in the second half of the year, up from its previous forecast of $107. Prices will rise further in 2009, averaging $148 a barrel, the bank said.
``Supply constraints and a lack of scaleable substitutes are set to continue driving the long end of the oil curve higher,'' Goldman analysts including Peter Oppenheimer and Jeffrey Currie in London wrote in a report dated today.
U.S. President George W. Bush will today ask Saudi Arabia to increase oil production to help lower prices and promote economic growth, White House spokeswoman Dana Perino said. Banks including UBS AG and Sanford C. Bernstein have raised their 2008 forecasts while Goldman Sachs analyst Arjun Murti has said oil may rise to between $150 and $200 within two years.
The trend in the growth of oil supply has fallen to 1 percent per annum, compared with global economic growth of about 3.8 percent, today's Goldman report said. ``Given this imbalance, long-term oil prices will need to rise.''
Third Quarter
The front-month West Texas Intermediate futures contract on the New York Mercantile Exchange has averaged $104.30 a barrel so far this year. In the third quarter, Goldman Sachs forecasts the price will rise to $135.30 and $145.60 in the fourth quarter.
Europe's Brent crude futures contract should rise to $133.80 a barrel in the third quarter of the year and $144.10 in the final period, according to the bank. The front-month Brent contract on the ICE Futures Europe exchange has averaged $102.52 a barrel this year.
The near-term oil market is being driven by ``long-dated'' prices, or the price of oil for delivery 5 years forward, Goldman said. While an increase in U.S. stockpiles and declining demand growth due to the global economic slowdown is creating ``near-term fundamental weakness,'' this is not causing lower prices, according to the bank.
``We do not expect these softer fundamentals to translate into spot price weakness given the strength in long-term prices,'' according to the report. ``We expect the bullish structural market to dominate the bearish cyclical weakness.''
Supply Constraints
Goldman said it was unlikely prices would eventually rise enough to justify large scale investment in alternative sources of fuel, thereby offsetting the discrepancy between supply and demand, because of resource protectionism which constrains supply growth.
Instead, an increase in long-term oil prices is required to suppress demand growth and bring it in line with supply growth, Goldman said. It forecasts the long-date oil price to rise 14 percent to $148 a barrel by early next year.
``Long-term oil prices will need to continue to rise to bring trend oil demand growth in line with trend supply growth,'' the bank said. ``Eventually a price will be reached which incentivizes significant conservation, new technologies and political solutions which will eventually cap the price rises.''
WTI crude for June delivery rose to an intra-day record of $127.43 a barrel in after-hours trading on the New York Mercantile Exchange today.
To contact the reporters on this story: Stephen Voss in London at sev@bloomberg.netAlexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net
Last Updated: May 16, 2008 08:41 EDT
Buying back my DUG trading position, at oil near $130 you have to play the reversal, just don't go too deep(only placed 5% of funds into the trade)
about time. i hope it sees 110-115 by June 26 for my DCR.
FWIW, established a starter position at yesterday's close. Perhaps we have put in a short-term bottom? Hope so!
Majority Of Oil And Gas Execs Say Price Of Oil Will Fall Below 100 Dollars Soon
[May 13, 2008]
http://telecom-expense-management-solutions.tmcnet.com/news/2008/05/13/3441214.htm
(Space Daily Via Acquire Media NewsEdge) Oil and Gas executives say that the price-per-barrel of oil will drop significantly from the current high level by the end of the year, according to the results of a survey conducted by KPMG LLP's Global Energy Institute. In this year's KPMG survey, which polled 372 financial executives from oil and gas companies in April 2008, 55 percent of the respondents think that the price-per-barrel of crude oil will drop below $100 by the end of the year.
Twenty-one percent think that the price will close between $101 and $110; 15 percent think between $111 and $120; and nine percent believe it will close at above $120. And, while 44 percent felt that prices would peak by the end of the year, a further 39 percent thought that they would not peak until after 2010.
The combination of traders moving resources into commodities and the weak dollar has had a significant role in the surge in pricing in recent weeks, said Bill Kimble, executive director for KPMG's Global Energy Institute. However, in addition, there are underlying, issues in the energy industry, such as escalating energy demand in emerging markets and declining oil reserves, which will continue to contribute to upward pricing pressure for years to come.
Despite the fact that the majority of executives questioned expect the price of oil to fall below $100 a barrel, 44 percent plan to increase their upstream capital spending by more than 10 percent over the next year, an increase of nine percent over last year. Twenty-six percent say that investment will increase by up to ten percent, and increase of ten percent over last year. Only five percent anticipate a decrease in investment in the coming year.
The expectation of increased investment by U.S. energy companies shows that oil and gas executives are deeply concerned about energy security, said Kimble. The survey shows that all avenues, traditional and non-traditional, need to be supported in order to find a long-term solution.
In addition to increased investment domestically, given the state of the U.S. economy, 46 percent expect that there will be more foreign investment in/acquisition of U.S. energy companies in the coming year and 18 percent expect that it will increase significantly. Only 5 percent expect a drop.
When asked what would most enhance U.S. energy security, respondents overwhelmingly felt that opening up drilling domestically is the best option. More specifically, 43 percent said that the Arctic National Wildlife Reserve should be opened for drilling and 28 percent cited opening up drilling in the Rocky Mountain region. A further 28 percent said that investment in renewable energy (biodiesel, etc) will enhance U.S. energy security the most.
However, despite many oil and gas executives feeling that there should be more investment in renewable energy sources they still do not see it is a serious near-term solution in the energy supply equation. Last year, 60 percent said that it will not be viable to mass produce any alternative fuels by the year 2010. This year, 54 percent gave the same response when asked about the year 2015.
While KPMG's survey showed that executives view alternative fuels as a long-term solution for the energy supply equation, they see other, existing clean air energy sources as more realistic in the next 20 years, said Kimble. Almost all of the respondents stated that they expect natural gas to become a larger contributor to global energy supply.
When asked about natural gas' role in global energy supply, 54 percent said that it will grow significantly as a percentage of total energy supply and 37 percent it will grow somewhat. Seven percent felt that its percentage will stay the same and only one percent felt it will drop.
When asked which clean energy source will dominate in the next 20 years, gas led the field with 50 percent of respondents, followed by nuclear with 31 percent respondents. While only 4 percent cited wind, many expect growth in this area with 51 percent expecting U.S. wind energy capacity to grow by 10 percent next year and 24 percent expecting growth of 20 percent.
Other findings:
- Indeed, a significant majority, or 63 percent, of oil and gas executives believe that growing demand due to accelerated demand in emerging markets is the major contributor to the high price of oil. The second highest contributor, according to 15 percent of the respondents, was the lack of access to new oil resources, and rising exploration and development costs. Ten percent attributed current pricing to growing demand in developed markets.
- 62 percent believe that while global warming is occurring, it is a natural weather cycle; 29 percent believe that CO2/mankind-induced global warming is occurring; and nine percent believe that global warming is not occurring. These responses are largely in line with those from last year.
- 25 percent of respondents believe that the issue of global warming should be addressed by the market and not government legislation; 11 percent say that the government should enforce mandatory carbon emission credits trading; and 16 percent say that the government should provide corporate tax incentives for investment in renewable energy sources.
- 15 percent say it will be viable to mass-produce biodiesel by the year 2015; 12 percent say it will be viable to mass-produce ethanol; and 10 percent say it will be viable to produce cellulosic ethanol.
KPMG will be discussing these survey results during its Sixth Annual Global Energy Conference, the event for financial executives in the energy industry on May 20th and 21st at the Intercontinental Hotel in Houston. This year's keynote speakers will be Vicente Fox, Former President of Mexico, and Ronald G. Prinn, Director - MIT Center for Global Change Science and TEPCO Professor of Atmospheric Science.
Copyright ? 2008 Space Daily, Distributed by United Press International
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