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#1 What are the fundamentals of the crude oil market?
01-18-2009, 03:28 PM
- Join Date
- Aug 2005
When oil rocketed past $100 on its way to $147 a barrel last summer, analysts frequently commented that prices "were not supported by the fundamentals." Now, with oil trading between $35 and $50 in recent weeks, a few questions keep crossing my mind.
Do the current "fundamentals" support $40 oil? What price do the "fundamentals" support? In 2009, with the world a different place after an economic meltdown, just what the heck are the modern "fundamentals" of the energy market? I called John Olson, the co-manager of Houston Energy Partners, for some answers.
Olson told me that the fundamentals of pricing haven't changed. They remain supply and demand, with additional forces provided by Mother Nature, demographics, and global politics and related tensions. "We're going through a down cycle right now," he said. "Things will sort themselves out in the next few months or quarters."
One thing is clear: Huge price swings bring huge problems. That's when fundamentals fly out the window, replaced by optimism and greed, or pessimism and fear. "No one in the world could afford paying $147 a barrel for oil last July," he said. "And, in a different respect, no one can afford $38 oil now. Oklahoma can't afford it." snip
wiegenliedGuest01-18-2009, 10:51 PM
This is either very good news or very bad news, depending on the position. Actually it is highly recommended to long oil when it was $ 20-35 a barrel. $5-$10 would be a miracle.
01-19-2009, 12:16 AM
- Join Date
- May 2008
After watching a liberal program like 60 minutes, I was surprised that rather than the oil companies being blamed of high oil prices, it was the speculators, hedge funds and banks like M.S., G.S. These are the turkey's who drove the prices up. The Congress should investigate these shysters.
Violatility is very high and it does not make a crap what the fundamentals are; investors are spooked.
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