Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (12831)	10/5/2004 12:38:34 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 116555

That's the magical aspect of oil. When the price of oil rises too far, it brings about it's own economic recession which promptly results in lower prices. The Fed "successfully" stopped the the Asia led recession world-wide recession in 1996 by dramatically expanding the money supply through new debt creation. But they've left their foot on the accelerator for so long that the excess demand is showing up in rapidly rising commodity prices, oil in particular. Eventually the little Fed Boy runs out of fingers to stick in the dike and you get the worse economic downturn to pay for the smaller downturn you avoided earlier. If our supplies of oil are running low, like some believe, this sets in motion a longer term price driven substitution. But I think the short-term spikes is just an expensive speeding ticket for breaking the law of economic cycles.

To: mishedlo who wrote (12831)	10/5/2004 1:32:37 AM
From: mishedlo	Respond to of 116555

Oil climbs back over $50 on U.S. Gulf outage Tuesday, October 5, 2004 4:51:10 AM reuters.com By Jonathan Leff SINGAPORE, Oct 5 (Reuters) - U.S. oil prices scrambled back over $50 a barrel on Tuesday, kept on edge by a prolonged production outage in the Gulf of Mexico at a time when major exporters are already pumping nearly full tilt. Supply anxiety is building ahead of the northern hemisphere winter, when demand for heating oil surges. Inventories of crude and distillates in the world's top energy user, the United States, are running up to 4 percent below last year. U.S. light crude <CLc1> reached a session high at $50.28 a barrel, the highest price since the record $50.47 one week ago. At 0405 GMT, U.S. crude was 24 cents up at $50.15. London's Brent crude <LCOc1> slipped 39 cents to $45.80 a barrel. "U.S. production has been slow to recover from Hurricane Ivan and people are worried by the low level crude and distillate inventories ahead of winter," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. "People are still watching Nigeria and Iraq. With OPEC producing almost at full capacity, any stoppage in Iraq's or Nigeria's exports would upset the supply-demand balance. It's a very dangerous situation." In the U.S. Gulf of Mexico, nearly 29 percent, or about 480,000 barrels per day (bpd), of oil output remained shut, three weeks after Hurricane Ivan first hit the region, the U.S. Minerals Management Service said on Monday. Dealers will now look to U.S. oil inventory data, due out on Wednesday, to gauge how comfortable oil supplies are in the weeks ahead of the winter. A Reuters poll of eight analysts predicted on average a fall in distillate stocks -- including heating oil, the main winter fuel in the northeast of the country -- by 800,000 barrels and a drop in gasoline stocks by 600,000 barrels. The weekly report by the Energy Information Administration due was expected to show crude stocks rising in the week to Oct. 1 by 1.1 million barrels from the week earlier. NIGERIA, IRAQ ON RADAR Oil prices fell on Monday after Nigerian rebels withdrew a threat to target the country's over 2.3 million bpd of oil production facilities, but concerns lingered over the OPEC member's stability in the near term. Iraq also remains volatile, with saboteurs regularly hitting pipelines. On Monday an internal line linking the country's north and south fields was hit, although this did not affect exports. Together the two countries produce over 4.5 million bpd -- more than twice the amount of spare production capacity held by members of the Organisation of the Petroleum Exporting Countries (OPEC), most of that in Saudi Arabia. OPEC President Purnomo Yusgiantoro said on Tuesday he expected oil prices to fall in the first part of next year if supply fears in the Middle East -- and particularly the disruptive turmoil in Iraq -- were to fade. Market bulls are also encouraged by signs that speculative funds -- a major factor in this year's steep oil price rally -- continue to buy into the market, despite the highest prices on record. "We've seen open interest increase over the last week -- with prices rising, that's a sign that people are adding length (taking new long positions)," said one New York-based broker.