Friends,
I am surprised to see how USA is still ready to believe that Crude is not going on speculation…When the crude demand has risen by just 1% in last year or so, how can Crude rise 40% in last 3 months….
It is now clear that Oil Speculation is on rampage without demand out stripping supply.
Lots of money has gone in for speculations and more money is still coming in as targets are given high…
The biggies Like Goldman sachs etc have big position in Crude basket and now they would like to cut their long position….and hence they are giving high target so that they can sell and they can come out of their longs with BIG profits…
When a US Senate spokeman says that there is no speculation in crude I was surprised to read that.
If crude is going to go up and up to $200 level and also surpass it then what will happen to US Airlines?All the Airlines will have to be closed as with such a high rate of Air Fares who will travel in those Airlines?What will happen to the World biggest economy?That is US?
The price of Milk is more now then the price of 1 gallon Gas….That is the anamoly in USA .The government is not even increasing the minumum rate per hr when compared with inflations, Gas price rise, Milk price rise etc….The person who is living on pay is finding difficult to live in such a scenario……
Crude has to come down otherwise it will take world back to 1929 recession.The situation then, no one knows what happened then…and hence will have catastrophe effect world over.The way Chinese market and Indian market are reacting is just a mayhem, mayhem everyday…..China is down 52% and India is down by 40% and still Citi gr and Lehman br says that India is still overvalued……They have first to look for their burning house and try to save investors money put in their MF’s.Both had lost their credibility.Lehman br is on brink of collapse and trying to garner funds from Gulf countries to survive.No wonder both are selling heavily in Indian Markets….
My first question goes to them who feels that Crude runup is not a speculation….
Has the demand went up by 40% in last 3-4 months?If the answer is no then Oil shouldn’t have gone up by 40% and if that is the case then Oil recent runup is speculation.It is just a case of more money chasing crude and other commodities.
If India and China are slowing down, how will one be able to justify the crude and commodoities runup?If the demand are slowing then how can Demand oiutstirp supply ?
Sooner or later the Crude is going to tank and tank in a big way.It can go even below $100 to around $80 level…..
The financial houses like Goldman, Merill Lynch, etc are ready with a call of crude touching $200 and even more.I am reading all these, but can anyone tell me what will happen at Crude $200 and over?World will be in such a BIG recession that it will take decades to come out of it.According to my view, Crude and commodities are going up only because of excess liquidity and all the longs are to be cut at any given time…..
I am waiting for that D day…..all the world funds has started pouring money in Crude and commodities because return on equites has become negative…..
I think it can be only USA who can do something in this speculation…….as the commodities market in USA needs very less margin to trade in crude and commodities.And it US has to that otherwise their own economy will get derailed in such a bad way that Fed or Ben will find difficult to save it from catastrophic effect.Their Autos co are already in death bed as we see GM and ford are at multiyear low price.
If Gas is going to be available at $4.5 and then at $6 and $8 then who is going to buy these big cars which is comsuming big gas and givin a milage of just 20 mile per gallon?
If Fuel prices will go on up and up what will be the price of Air Travel tickets?It is already burning the pockets of companies where their employees has to travel frequently.What will be their profit?Aree…..they will be in a huge huge loss and they will be closed.
I think that with subprime crisis still lingering high on the economy of USA, forecloser are still coming up in big way,no way to come out from there, I think US can’t afford to have Gas at $ 4.5/gallon…..these will blow as a death knelt to US economy….
I think it is high time that Mr Prez take a sane decision to stop crude speculation as early a possible…….
Everything you have mentioned can be correct. One more analyst has said that crude can be between 100$ to 125$.. but it can spike till 160$.
ReplyDeleteI pray what ever you have said is true
While the demand has not risen as much as the prices have, but there's a theory that goes will crude oil wells. It is easier to pump out the first 10% off of these wells, but gets increasingly difficult when that top 10% is exhausted and you have to drill deeper. That, some analysts close to me, say is a major contributor providing muscle and confidence to the speculators operation in oil speculation. So while 145 is grossly unjustified, seeing 80 might be getting a little unrealistic now. And what corroborated this theory is the exponential rise in the daily rental prices of drilling rigs. The deep-water drilling rigs that were rented out for $30,000 a day are now going for as much as 400,000. For the simple reason that we have to dig deeper for out crude, and because deep water drilling is extremely complex. My 2 cents.
ReplyDeleteHi Rajeev, you are absolutely right about the state of Crude oil right now, I get a feeling that the US government is indirectly encouraging the big banks which lost heavily in the sub-prime market to cover their losses by speculating in Crude. The US has also tried Oil politics in the middle east which gave rise to terrorism. I think this play on Crude will have more impact on mankind than any other calamity. Crude will be the single BrahmAsthra which may wipe out economies in the future.
ReplyDeleteI fear for my children in the future!
an article from toi to tell ho big is speculation in commmodities
ReplyDeleteNEW DELHI: Analysts have for some time now been arguing about how big a factor speculation has been in driving international oil prices sky high.
Finally, thanks to a US congressional investigation, there are figures that seem to confirm that it has indeed played a significant role. Conventional arguments put the voracious oil appetite of China and India as the main reason for the spike in prices.
Crude oil prices have gone up a staggering eight times in the past 10 years — from about $18 a barrel at the beginning of 1998 to $146 a barrel on Thursday.
In the past one and a half years, prices zoomed by over 133%. Coming close on the heels of record-breaking food grain prices, this has sent shock waves around the world. The knives are out as big oil corporations, governments, oil exporting countries and investment bankers blame each other for this situation.
The US, as the largest consumer of oil — 24% of world output — has been burning midnight oil trying to find out the reasons behind this ruinous price rise. Over 40 meetings of various committees and sub-committees of the US Congress have been held in the past 11 months to investigate the inflamed oil market.
And the truth is slowly seeping out. In a hearing of the obscure Sub-Committee on Oversight and Investigations, held last week, it emerged that one of the main reasons propelling ever-higher commodity prices is the gigantic flow of speculative funds into the futures trading market.
This has been alleged many times earlier, but figures pinning it down have come out for the first time. Investments by pension funds, sovereign wealth funds and endowment funds in commodity futures increased from $13 billion at the end of 2003 to $260 billion in March 2008.
That's a 20-fold growth in less than five years. These figures have been calculated by Michael Masters, a fund management expert who testified before the sub-committee. His calculations are based on figures from US Commodity Futures Trading Commission, a regulatory body, and reports of various fund managers.
These funds have been buying up futures of 25 commodities. These include food items like coffee, cocoa, wheat, soyabean, sugar and cattle/hog; energy commodities like crude oil, petrol and natural gas; and metals — both base and precious.
Thanks Ravi,
ReplyDeleteActually I read the whole interview of Masters but has lost somewhere.If I will find I will paste it here....But keep pasting such articles as it helps increase knowledge...
Dear Rajeev sir,
ReplyDeleteThis is the best artical i have seen, thanks for it. It open my eyes. Means Warne buffet are misguiding the people. i can't think in that direction,still learning from u.
Ahmed
Ahmedsir,
ReplyDeleteWarren Buffet is misguiding investor is too strong a language used for anyone.After we all look at him as a father figure in stock market....
Rarely he use to predict anything...going wrong is human nature and still he has not proved wrong.....but even if happens then we can't blame him....
First we have to blame others who went wrong all along in Indian market when they gave a constant bearish call on market and people sold and lost the oppotunity to earn in big ways...
Well,I have never blamed anyone here.Actually I have never talked of someother blog as well nor have even mentioned them even though I have seen many even don't know proper English and there is no sense in their writing...
The meaning becomes different when they write suh Eng...
I would only say..Just forget to blame anyone....that's all....
Dear rajeev,
ReplyDeleteya u r right. I sholudn't use that type of statement against anybody. Next time i will take care. But i feel many biggies in stock market giving wrong call to earn.
Ahmed