Shortage fears push oil futures near $140

[uscitizen]

Shortage fears push oil futures near $140

By Carola Hoyos and Javier Blas in London

Published: May 20 2008 19:06 * Last updated: May 21 2008 10:57

Fears of a shortage within five years propelled long-term oil futures prices to almost $140 a barrel, further stoking inflationary pressures in the global economy.

The spot price of Nymex West Texas Intermediate hit a record $130.30 a barrel on Wednesday. On Tuesday investors had rushed to buy oil futures contracts as far forward as December 2016, pushing their prices as high as $139.50 a barrel, up more than $9.50 on the day.

Veteran traders said they had never seen such a jump and said investors were increasingly betting that oil production would soon peak because of geopolitical and geological constraints.

Neil McMahon, of Sanford Bernstein, said: “Peak oil views – regardless of whether right or wrong – are seeping into the market and supporting high prices.”

Anne-Louise Hittle, of Wood Mackenzie, added that investors were shifting their focus from the short-term to the medium-term, where supply fears played a bigger role. Since January, long-term futures oil contracts, such as those for delivery in 2016, have jumped almost 60 per cent, while near-term prices have gone up 35 per cent.

That trend was exacerbated by T. Boone Pickens, the influential investor who believes world oil production is about to peak as aging fields run dry. He warned that oil prices would hit $150 a barrel by the end of the year.

“Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87m,” Mr Pickens told CNBC. “It’s just that simple.”

http://www.ft.com/cms/s/0/c2955660-2696-11dd-9c95-000077b07658.html?nclick_check=1

 

[Topspin]

finally approaching a fair price. Yeah baby

 

[uscitizen]

But you said there was plenty of oil ? How about it Topsplutter ?

 

[Topspin]

uhhmm let's see do I want $132bbl or $20, I'll go with $132. thanks

 

[uscitizen]

I will go with about $75 seems to be a fair price.

 

[uscitizen]

Oil will untimately be more regulated by the govts.
for better or worse it is inevitable.

 

[Cancel 2016.2]

I will go with about $75 seems to be a fair price.

you are a bit low. Based on supply and demand it should fall to around $90-$100.

This recent run up is over done. I think we hit $140-150 and then see a sharp pull back to the $100 level.

 

[Chapdog]

this is just a speculators spike. there is plenty of oil. its in a bubble right now. there will be a correction at some point.

 

[Dilloduck]

---investors were increasingly betting----

I have such a good feeling when gamblers tell me what I have to pay for petroleum if I wanna buy any.

 

[Topspin]

it was in the teens last decade, so no price on the down side would surprise me

 

[uscitizen]

The weak dollar will hold it higher than it was if nothing else.

 

[Cancel 2016.2]

The weak dollar will hold it higher than it was if nothing else.

True. The weaker the dollar, the higher oil prices will remain. If we see a strengthening of the dollar by 10% (all else being equal), oil prices should decline by a similar margin.

Which is why I think we will see a fed rate increase by the end of the year. These lower rates are not effecting the credit lending. A stronger economy will.... and that is led by a somewhat stronger dollar (relative to today).

 

[uscitizen]

Yep the rate will probably go up by years end SF. but the Feds are between a rock and a hard place on that. Sort of damned either way.
I say bite the bullet and endure the pain and go for a truly stronger economy.

 

[Cancel 2016.2]

Yep the rate will probably go up by years end SF. but the Feds are between a rock and a hard place on that. Sort of damned either way.
I say bite the bullet and endure the pain and go for a truly stronger economy.

I disagree. They are not nearly in as bad a shape as they were to start the year. The economy is showing signs of strength right now. The dollar is forming a pretty big base. While we will still hear about foreclosures for the next several months, the worst has been priced into the equity markets and they too are showing a buildup of a strong base.

The fed should start raising rates this fall to combat higher energy/commodity prices.

The idiots in DC should indeed recind their mandate on ethanol production (unless they change it to cellulosic specifically). That will help with the grain problems world wide.

 

[uscitizen]

Yeah the corn ethanol needs to be phased out over the next couple of years or so as celluistic methods replace the capacity. If we just turn it off now the results will be bad on many fronts. An immediate near 10% rise in oil consumption, the local impact on economies which have been boosted by the corn ethanol, etc.

 

[Cancel 2016.2]

Yeah the corn ethanol needs to be phased out over the next couple of years or so as celluistic methods replace the capacity. If we just turn it off now the results will be bad on many fronts. An immediate near 10% rise in oil consumption, the local impact on economies which have been boosted by the corn ethanol, etc.

true, you would see an immediate rise in oil prices, but you would also see a dramatic drop in grain prices. Food prices effect people more than oil. There are ways to reduce energy usage... food consumption is much harder to reduce.

 

[uscitizen]

true, you would see an immediate rise in oil prices, but you would also see a dramatic drop in grain prices. Food prices effect people more than oil. There are ways to reduce energy usage... food consumption is much harder to reduce.

We are too fat anyway SF.

 

[Cancel 2016.2]

We are too fat anyway SF.

Eating less does not equate to losing weight. In fact many who attempt to diet via "fewer calories" tend to gain weight as the end result is a slower metabolism.