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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (9326)	5/6/2008 1:26:00 PM
From: Patrick Slevin	Read Replies (1) \| Respond to of 33421

Interesting. I had thought of doing a 2009 NatGas Bull Spread last year because there was a similar Backwardation in NG but passed on it. I don't do too many Commodity options. I should watch the out months, I don't as a rule because I watch so many markets. It's my understanding that the Refiners are at the point where there is about equilibrium in Capacity. Strange, for if that's true then all of this talk about the need to build new refineries is just noise.

To: John Pitera who wrote (9326)	5/6/2008 2:55:13 PM
From: The Ox	Read Replies (1) \| Respond to of 33421

IMO (only) Let me start by saying that I'm not trying to cause a political slant on this thread and I apologize in advance if this is the way its coming out but I believe that there isn't anything that can be done until the next President takes office, whomever that will be. You have only 8 more months where HAL and GS will be in control of the White House, the US Treasury and those who create the associated policies. They are "going to get theirs while the getting is good". They have done this from the start and there is no way they are going to change now. So its not surprising to this observer that GS is trying to goose the crude oil market a few more times before the end of their majestic run. We've had zero energy policy out of the current administration. At least nothing that would actually benefit the people of the USA, unless you've been a shareholder of GS, HAL or most other O+G companies. I'm happy for Houston but when policies are implemented-- to the detriment of an entire country --for the benefit of a single industry, eventually there will be an incredible backlash which will take out the many who are going to be guilty by association. At the current prices and higher, so many other fuels become economical. By inciting fear, they push oil higher and higher but it will eventually collapse once the world realizes that there is a reasonable supply available. We aren't awash with crude but current stocks are very much in line with the averages available the past few years! In December 2006, OPEC was "defending" $55 crude. Today they're defending $110 crude. Gee. What a surprise that GS wants to defend $200 crude!!! One "old time" factor that I still believes holds true... the cure for the high price of oil will be the high price of oil. Alternative energy in many forms are coming online due to the excessive price of crude. This will take a while to play out but the end game is near, so the fear factor has to be raised to defend the ever rising price. Was oil excessively low in the late 90s? Of course. We had talk of $5 oil back then. The cure for the low price of oil, was the low price of oil! Now the pendulum is swinging in the other direction. Everyone loves to point out the value of the dropping dollar but this is only one factor. Oil is up 100% in the last year and the dollar hasn't fallen by 50% during the same period. GS continues to push everyone into commodities, as they make a substantial portion of their profits from these areas. I read recently that the amount of money that is currently trading crude oil and futures has gone up 1000% or more in the past 5 years (I'm sorry I don't have the source handy). This new money is now chasing all commodities (another reasons why we've seen incredibly fast price rises in foodstuffs). Eventually, the bubble will burst and sanity will return to the crude markets. Who knows how high the price will get before this becomes a reality? One look at the NASDAQ in 2000 will give a hint to how out of balance with reality a market can go. Crude is in a similar uptrend and it will probably find a blow off top once reality is in control instead of fear. Let me finish by saying that I know a few people in the oil industry and they are completely fed up by the lack of any real long term energy policy in the US. I am fairly certain this will change when the new President enters the WH, whomever that may be. jmo TO