Don't forget silver!

you would have an argument from MrBill. If you go to his thread on oil trading he has some pretty good explainations of why things are unfolding currently. He figures you can make money on both ends of the swings and has done so.

normally Pickens prediction would have been correct....oil and product stocks are extremely high. As some pundits have pointed out the last time they were this high was 1999 and oil was around $20. What Pickens and others missed though was that spare capacity is at an all time low...noone wants to get caught out without some oil in hand if there is a shortage for one reason or another (hurricanes etc.), so they keep buying. Theoretically after some point when the hurricanes don't do anything, Iran shuts down their nuclear ambitions, Nigeria comes back on line buyers will become sellers and the price will drop pretty rapidly.

I have to ask, what kinda world do you live in? There is always geopolitical uncertainty somewhere. When these hot spots cool off, others will form. That is the nature of things. These kind of events are always occurring. It's just that before there was enough shut-in capacity to make up for shortfalls. Now there isn't.

It has to be a hotspot that affects petroleum production....for instance ongoing disturbances in Cote d'Ivoire, Haiti, Somalia etc. would be meaningless to traders. As well they really don't care about countries that do not produce large quantiites of oil.

So what I am saying is if the US became happy with Iran, Iraq got sorted out, Nigeria gov't sorted out issues with the population, and the Saudis solved their Al Qaida problem the pressure on oil price would largely be relieved. Al Qaida could blow up as many buildings as they wanted to in Indonesia or Malaysia (as an example) and traders would likely only be interested peripherally.

These things in the producing countries were not always happening. Exactly when in the past did rebels effectively shut down all the major production in Nigeria? When in the past did Al Qaida actually target Saudi production facilities? When did Iran threaten to shut off oil production?
Or perhaps I missed reading the paper that day?

Of course the EXACT same events haven't happend before, but I seem to remember Iran taking 40 American hostages once upon a time and then there was that rumbling from Saudi Arabia about using the "oil sword" back in the 70s. Can you imagine what would happen if SA used the "oil sword" today? What if Mexico gets upset about getting shafted in free trade issues? What if Canada decides to sit on the tar sands as a form of SPR? What happens if (when) the House of Saud is overthrown? Chavez doesn't seem to happy with us either. The list of possible scenarios is endless.

well certainly anything can happen....the difference is that we have a "perfect storm" of political uncertaintly with respect to oil production currently, major potential disruptions happening all at once...makes for a very nervous market. In the past these were basically one offs that sorted themselves out eventually.

BTW the Saudis no longer have an ability to use the oil sword. They are now producing at capacity so they can't flood the market...if they tried to shut-in production much needed cash for ongoing public works would evaporate and unemployment escalate to a situation much worse than it is now......a sure means of guaranteeing overthrow. Also I believe the free trade agreement does not allow Canada to sit on reserves simply because the act of transfering oil from the producer is deemed a sale...under NAFTA Canada has to provide a certain amount of demanded volume to the US that would be sold elsewhere..if memory serves me correctly.

I agree, the House of Saud would guarantee their own overthrow if they tried to shut-in production, but what if they get overthrown first and a much more militant islamic government takes over? One that doesn't have any qualms with letting its own people starve just to punish the "great Satan." Imagine Iran's radical fundamentalism sitting on SA's reserves. Considering that the House of Saud is aging and their control is becoming tenous (as well as their impending demographic problems) and the scenario becomes much more plausible.

And we all know that international treaties never get ignored no matter how inconvenient they become for the obligated country.

so far the US has been pretty good at ignoring NAFTA when it suits them (softwood lumber issue) but Canada has been a trooper and honored all of our obligations.

I never said that Canada wouldn't be justified in ignoring NAFTA, especially considering the softwood lumber issue. I don't expect Canada to keep playing fair forever when we aren't.

I really think that Herny Groppe is the man when it comes to oil. He stated recently that oil has a terror premium of 8 bucks. But to put it into perspective, there has been 6,000 yrs of conflict in the middle east.
Also, demand/ economic activity will adjust to supply of oil and not vice versa. Consumption has to be restrained by high prices and recessions just to keep the equilibrium of oil between 50 - 100 bucks. Limitations of cheap supply is the dominant factor here... this is new, never has happened in history.

Hey guys, don't forget that 1/2 of the canadian oil companies, atleast the oil sands are already owned by foreingers, of which I suspect, mostly americans.
This is cheap oil for the americans, buying shares is alot cheaper than starting a war. I just wonder how canada really feels about the foreing interest ??

Out of the direct context but still within the larger one here a quote:

Pickens has been acquiring acreage overlying the Ogallala aquifer with hopes that he could pump and sell the as much as 200,000 AFY of water to one of the state's metropolitan centers - El Paso, Lubbock, San Antonio, or Dallas-Fort Worth. Ogallala is already severely depleted.

This statement I picked up from an old an short thread posted end 2004: link

Don't you think Pickens is starting to speculate into areas he knows
nothing about ??
There is no water shortage in most areas in North America,
don't tell me there is "peak water" !!
I really think all this media attention has gone to his head.

He better be praying it starts raining out there.

unless he can predict the weather too.