Oil @ $100*...again
But this time on the way down!
* $79.68 to be exact
Using, AXXel Knutson’s VTAR™
October 10th, 2008
[“Volume Trade Analysis Research”™]
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More than four years ago when oil was at $40/barrel I suggested that we would see $100. Well, we did see it but I was a little too conservative in that forecast it appears. The high was $148. And here we have oil again at $100, well make that light sweet crude for November deliver at $79.68, but this time on the way down.
So, what’s the outlook? Well, I suggest you re-visit my interview on RTE Radio Ireland...the link is in that press release of four years ago [May 24, 2004]:
Plug this into your browser: rte.ie and look for Audio & Visual" News at One" – you must have RealPlayer or MSFTs Media Player to hear. After you hear the interview all I can say now is that there is no change that I can see. There is a lot of talk, a lot of positioning, a lot of blah, blah, blah. That is the same kind of positioning by politicians back in 1973 when we had gas lines five blocks long. [Well, not for me, I drive diesels and there is no one lined up for that pump, ever].
$100/Barrel Oil?-Here's the jest of the Radio Interview
Failure of the United States to curtail demand is the primary reason for exploding oil prices
(PRWEB) May 26, 2004 -- AXXel was interviewed this morning [afternoon in the UK] regarding the spike in oil prices. AXXel has long contended that it is incumbent upon the U.S. to reduce consumption and that this can only be done via large increases in the Federal gasoline tax to drive the American consumer into more fuel-efficient vehicles [an unpopular idea no doubt at first glance]. But if we refuse to scale down our vehicles, gasoline prices will simply approach $5.00-7.00/gallon anyway simply because of the constraints of supply, so better to get us out of our SUVs [including AXXel’s] and into cars getting 40 MPG+, thus likely eliminating our need to import oil from unstable sources [OPEC], eliminating our negative balance of payments and improving the economy.
But not to worry, there is not a leader in sight in the U.S. that pays ANY attention to our piggish energy stance…but we will pay for this stance…eventually and maybe it will take oil at $100.00/bbl to do it.
Here is the interview on RTE, Radio Ireland – the link is
rte.ie and look for Audio & Visual" News at One" – you must have RealPlayer or MSFT's Media Player to hear.
Let’s look at the price:
Brent Crude Oil
Chart courtesy of futures.tradingcharts.com
Back in 2004 when I had that interview oil had a solid base at that $40 level and had not really moved from it in a ½ decade. That base still supports oil today and I expect that oil at $50.00/bbl is the absolute best that one could expect from a pullback. Indeed, a secondary base at the 70-90 level is more logical at this point and given the swiftness of the decline from the $150 area it is my estimate that a double break of $90 will likely be the end result of the decline and OPEC will move Allah and earth to keep the price at $70.
In the long-term, there is no leadership willing to do much more than talk about energy. Add to that a driving culture that will only reluctantly give up their SUV’s and gas hogs, there can be no expectation that demand from the U.S. will diminish. Now you can couple that with India ready to flood the world with cars that cost under US$2,500, the Chinese with the world’s largest driver training schools [well, YOU may think they know how to drive]. $150/bbl oil is not in the cards. Now you can try $300/bbl and I will probably be conservative again in this estimate. Axxel Knutson 10.10.08
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