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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: SilentZ who wrote (404506)	8/5/2008 2:50:59 PM
From: HPilot	Read Replies (1) \| Respond to of 1576742

No. I don't think so. Oil came down because driving is off in the U.S. by 3-4%. It would have to dip even more to bring oil much lower, I'd guess. -Z Driving has been down since spring. The market would simply ignore that and notice that stockpiles have dropped and up the prices would go. They didn't seem to have a clue that since driving was down there was no need to replenish stockpiles at high prices. It didn't seem to affect prices till Bush said he would lift off shore drilling bans.

To: SilentZ who wrote (404506)	8/5/2008 3:10:20 PM
From: tejek	Read Replies (1) \| Respond to of 1576742

A contrarian view on oil written prior to the current drop in oil. Monday, 26 May 2008 It's the oil price, stupid, but for how long more? I have been cautious about chasing the bear market rally in the last few weeks, having turned bullish post the cathartic Bear Stearns move (see post). Specifically, I warned at the end of April that the financials rally was premature in the light of no apparent bottom for US housing and contagion to other credit markets, (see Banks: The end of the beginning... ) and we have now seen most bank indices slide back to their March lows. In fact the rally over the last 8 weeks has seen not only low trading volumes but narrowing breadth, with resources and particularly oil related stocks (now over 15% of the S&P) spiking with the move in crude. The sharp fall from the 200 day moving average last week in US markets is ominous. Belatedly, the euphoric and unsustainable move in energy prices has awakened inflation and earnings fears in the wider market, the trigger for last week's sell-off. Ford, GM and the airlines all declared that they are reeling from the oil price shock, and consumer sectors exposed to the squeeze on discretionary spending all took a hit; short interest in consumer and financial stocks has risen sharply recently. The key driver for all markets from the dollar to bonds over the next few weeks will be where the oil price goes next. Far from worrying about $200 a barrel oil in the foreseeable future, I would stress test my portfolio for sub $100 oil, which is far more likely from these levels. At a time when maybe 50m barrels of oil is simply parked in supertankers offshore with no takers, Peak Oil is not at hand but peak speculation in oil may well be. Given the weight of resource stocks in key global indices (and earnings), it will be interesting to see how markets react to a looming reversal in oil; some pretty brutal sector rotation would certainly result and the dollar would resume its stalled rally (see previous post for analysis of the Peak Oil myth). Germany has now called for a global ban on oil market speculation, echoing hardening sentiment in the less than stunningly perceptive but increasingly furious US Senate (they should be threatening to sue US pension funds, not OPEC). If the market doesn't collapse soon under the weight of its own excess, legislation will surely be enacted within months to choke off the tens of billions in commodity index and ETF funds flooding the market in a self-reinforcing spiral (Lehman calculate they amount to about $240bn now, up from $70bn in early 2006, of which $90bn is new money). Ironically hedge funds are not the real culprits, and many have been in fact short on a fundamental analysis until recent weeks when they have been forced to close their positions, exacerbating the parabolic acceleration in prices. As oil grabs not just headlines but editorials around the world, and retail participation soars via ETFs and spread betting, a lot of bells are sounding the top of this move. Most encouragingly for the bear case, The Economist has decided in its wonderfully pompous way that high prices are here to stay and it's got nothing to do with speculation; this from the guys who forecast $5 long-term oil in 1999. Short of an oil trader getting Man of the Year from Time magazine, as contrary indicators go, it doesn't get much better than that. read more......... deadcatsbouncing.blogspot.com