I say bring it on! I can make millions shorting this on the way down!

Oil seems to have found some support around $107. But the dysfunction has moved back to equities, as the Dow is down some 80 points, which is a gap down of 300 points from earlier in the day. Nowhere for money to perform, save treasuries. LOL!

IKES EDITED my optimism....

They're saying oil closed below $110. We'll see $100 before this is over... unless we can close above $110 tomorrow...

Chuck

Hmmm...I dunno. It fell on almost no volume. There was none of the heavy selling pressure like we saw on Thursday and Friday. Below $110 it ran into heavy buying pressure. It ended the day as a hammer pattern. I'm not really convinced that oil is going to do a lot more falling.

The dollar is the wild card in all of this. It reminds me of one of the zombies from Return of the Living Dead. It just won't die. I feel like it's mostly oil that's driving the dollar not vice-versa, but they go together and the dollar seems to have gotten it's second wind here. If it jets up tomorrow, that could drive oil down some more.

A very large hedge fund is closing shop (clcik here), which largely explains the nonsensical moves across the commodity spectrum, including oil. Again, de-leveraging writ large is going on. Going long oil isn't exactly what the uninitiated should attempt here.

Now we know why NYMEX opened early this weekend. Unbelievable.

firestarter said:



With the S&P now giving a PE ratio of 28.5:1 not surprising. Treasuries are not, however, safe. They are paying less than the inflation rate. A lot less. If you put your money in them for any period of time, it’s going to rot!

The first part of the sentence is probably the most accurate, “Nowhere for money to perform”. Try gold, at least you won’t lose all of it; if you can get it.

this article backs firestarters arguments.bloomberg

I could swear the mainstream media is schizophrenic.

Here's a different headline :

Oil below $100 will prompt OPEC cuts: Credit Suisse

The MSM may have it right this time low. I wouldn't bet lunch that OPEC is ready to become an effective cartel today but as the excess capacity diminishes they get closer IMO. Ignoring the political/military angles, I think an artificial supply PO (export limits agreed to AND ADHERED TO, will rule the day long before a true physical PO will be here to stay.

A talking head on fox observered that OPEC can not stop prices from rising because they don't have excess capacity to flip on any more. But they do have control on how far prices fall by simply shutting down the flow. Why should they sell a drop at $55 when they can just wait a week or two and get it back above $120.

Exactly vt. What's even more worrisome is what OPEC, especially the KSA, has learned this last year: the world economy, so far, has absorbed the higher prices without signs of severe demand destruction. An even worse future lesson may be that even with severe DD if enough of the healthier economies can still pay the higher prices OPEC can still earn high incomes with significantly lower production rates. I'm sure Mexico would love to cut their rapidly declining rate in half if they can still make the same income. Over night their reserve life would double. I have to believe that if this scenario plays out the political/miliary SWHTF sooner then later.

Yeah. OPEC has to be kicking themselves that they didn't drive it up to $120 years ago. Which then I guess begs the question....How are we sure they really don't have spare capacity now?

Another thread just posted that the KSA has just officially turned on their newest field at 500,000 bopd. Let's just assume that's correct. Exactly who are they going to sell it to? I've still seen no report of any crude buyer being unable to secure delivery of crude if he can meet the price. Local distribution problems for sure but not price based. The only buyers the KSA can sell to are the ones already buying from another exporter. And the only way that will happen is if the KSA under cuts the other producer's price. And it was this sort of competition that led to $10 oil in 1986.

I wonder how coincidental this press release is to the upcoming OPEC meeting where quotas and possible production curtailment is at the top of the agenda. We may be seeing the intimate push-come-to-shove on the question of OPEC’s ability to finally exercise cartel discipline. I wonder if the KSA will use this power to force agreement. And such agreement may not be that difficult to gain from the producers who see their country’s PO in the near future.

If KSA will wait a couple of years, it can sell to Mexico.