Anyone care to make a prediction if the current events in Iran will have a significant impact on the price of oil, and if so how high it may go?
Sorry to be greedy, but I sure hope my interest in a McKenzie County, North Dakota well comes in this Fall.
Supplies will go up. Demand will go gown. As a result, prices will continue to climb. Explain that to us. The last time prices skyrocketed (2008), demand went down significantly. Experts and analysts predicting $250 oil were puzzled. Keep all this in mind when you read about analysts predictions.
Generally speaking, it's also important to keep in mind that the US uses 25% of daily global oil consumed. If prices get too high for Americans, the relative drop off in global demand stands to be proportionally greater accompanied by a price plunge.
Seems like a whole lot of money is in crude as a hedge against the dollar. The money in crude is many multiples of the daily volume of the underlying actual commodity volumes. Its this amount of investment money that is driving the current price, just like last summer. I'd wager a retreat from here over 3Q, per the usual cycle.
Probably keep going up during the summer and then fall off a bit at end of year but staying above $70/barrel the entire time. Another question is why Natural Gras prices are so low? Don't get me wrong I love it. I just want to know why it was over 4 times as high last summer and then fell off a cliff. Would love to hear an explanation on that one.
"Most people do not understand that all prices are set at the margin. There are 75 million houses in America. Only 4 to 5 million homes are sold per year. Therefore, 5% to 6% of the homes in the U.S. set the price for the other 70 million homes. This same concept applies to the last barrel of oil. When worldwide demand exceeded worldwide supply in late 2007 and early 2008, those last barrels of oil set the price. This explains why those last barrels of oil set the price above $100 a barrel. It wasn’t greedy speculators and evil oil companies." The Link See World Oil Supply & World Oil Demand charts at the bottom of the linked article. "It is clear that supply has stayed in the range of 86 million barrels per day while demand has dropped to the range of 84 to 85 million barrels per day. If oil demand rises by 3%, demand will outstrip supply again."
gasoline/oil rises every Summer. However, folks are apparently betting on the economy recovering and ramping of of consumption world wide once again. With the US being the largest consumer our consumption habits drive the market and our conservation has been reduced by the drop in oil prices and our penchant for Summer vacations. We cut our consumption and the price dropped because folks got caught on the drop and the speculators sold off. Right now the speculators are buying and pushing more money into the commodity again. The influx of the money not supply and demand is what drove the price up last time. It's the same now but now there is a little bit of underlying trend data you could use to support the argument. IF you assume - a) The economy has turned b) Americans will not conserve further from the current consumption levels c) demand in non-US countries will again rise because of the recovering world wide ecnomy. You could say that Oil Prices are actually a bet on the worst being over ecnomically. You could also argue the contrarial argument, that prices are going skyward because of the dollar. However I would argue that is the less likely secnario, simply as in the last 18 months the price of oil is much more closely pegged the the US Stock market than the relative value of the dollar.
The EIA also upgraded their demand forecasts, so that defnitely has something to do with the rise in prices. But yes, oil prices go higher in the summer. I have said all along that I think the 65-75 a barrell range is probably where oil should be. If it is too low, exploration, drilling, and R&D will stop. If it is too high, well, see last Spring/Summer for examples.
Worldwide demand (as opposed to US demand) is what you need to focus on. That's what will affect the demand side of the price
Just under 50% of oil is used to make gasoline. Hence the reason he keeps telling you that there is a difference between oil demand and gasoline demand.
