The Great Oil Bubble has Burst

[WA_Vol]

Let's hope anyways:

One way or another, said the fundamentalists, the only destination for oil prices in the medium term was somewhere north of $200 a barrel. Layered on top of these long-term factors were the short-term headlines.

And meanwhile, five years of rising oil prices have provoked a wave of investment in new drilling and refinery capacity - including the opening up of inaccessible oil sources that no one wanted to tackle when prices were low. Whether it is deep under the Arctic ice-cap or soaked into the tar-sands of northern Alberta, there turns out to be quite a lot more oil waiting to be exploited before we really approach the peak-oil apocalypse.

On the demand side, a shuddering deceleration in economic activity across the industrialised world is starting to take pressure away. Many economists think the downturn will be deep and painful, and Opec (whose predictions are naturally at the low end of the range) thinks demand for its output could be lower in the early part of the next decade than it was in 2006.

In the motor industry, the talk is of plunging sales of gas-guzzlers, as drivers on both sides of the Atlantic switch to smaller, fuel-efficient cars - or simply cut out non-essential mileage.

There is a long-running argument as to just what proportion of any commodity price movement can be traced to speculative activity by hedge funds and others, and what proportion to physical demand. But when the oil price swings up or down by $5 or more in a single day, you may be sure that the fluctuation is not being caused by a sheikh on one end of the line arguing with the manager of your local petrol station on the other: it is the financial parasites in between who are moving the market.

But for the time being, a return to a relatively "normal" oil price in the $60 to $80 range would take the sting out of the current inflationary surge, and that in turn would allow the Bank of England to contemplate cutting interest rates to stave off recession and help the housing market.

The great oil bubble has burst - Telegraph

 

[MG1968]

still doesn't change the fact that the US needs to become independent of OPEC.

 

[Rasputin_Vol]

still doesn't change the fact that the US needs to become independent of OPEC.

If this truely is a bursting bubble, this will be our last chance to take advantage of the opportunity to get more domestic drilling in motion.

 

[Rasputin_Vol]

Or, this could be a clever move by Bush/Cheney to lower the price of oil just in time for the November elections. They've made as much money as they can on their way out of town, and now they are going to talk to all of their Big Oil buddies to relieve some pressure on the voters for the next few months.

 

[VolByBirth]

Let's hope anyways:




The great oil bubble has burst - Telegraph

The oil price spike has had little to do with supply and demand and more to do with the weak dollar. As the Fed cuts rates the dollar drops. When the dollar drops money always flows into commodities. Rest assured US interest rates will rise to restore value of the dollar fairly soon.
Posted via VolNation Mobile

 

[rwemyss]

The oil price spike has had little to do with supply and demand and more to do with the weak dollar. As the Fed cuts rates the dollar drops. When the dollar drops money always flows into commodities. Rest assured US interest rates will rise to restore value of the dollar fairly soon.
Posted via VolNation Mobile

I'm not sure how soon you should expect a rate rise. In fact, the credit 'crisis' has really started to affect other markets around the world in ways that people didn't expect... and now they think that the Fed's quick response (reducing rates) has put our economy in the best position for a quick recovery.

FT.com / MARKETS / Currencies - Dollar at crossroads amid brighter US outlook

Ulrich Leuchtmann at Commerzbank said in a note he expected the dollar to rise “like a phoenix”. He said low US interest rates were not a burden on the dollar but an attraction, proof that the Federal Reserve was able to react quicker to turmoil than other central banks.

 

[VolByBirth]

I'm not sure how soon you should expect a rate rise. In fact, the credit 'crisis' has really started to affect other markets around the world in ways that people didn't expect... and now they think that the Fed's quick response (reducing rates) has put our economy in the best position for a quick recovery.

FT.com / MARKETS / Currencies - Dollar at crossroads amid brighter US outlook

Well, if you believe what you wrote and that the US is poised for a quick recovery -- then raising rates will most certainly happen. The Fed does not want interest rates to stay at this level -- they are left with little room if something were to come up. At the same time, it contradicts the part about the "credit crisis" being more widespread and harmful than expected. I doubt we are immune to any aspects of this credit crisis.

I also find it interesting that just as the dollar has gained ground oil has simultaneaously been dropping. Short one, long the other.