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Phil Flynn, an analyst at Alaron Trading Corp., said London’s expectation that inflation will fall below its target of 2 percent next year plays into a strong dollar; when a country’s inflation rate falls, it is less likely to raise interest rates, a move that would support its currency against the dollar. Crude is bought and sold in dollars, and when the dollar rises against foreign currencies, investors often buy the greenback and sell oil.
Flynn said investors are adjusting to a new reality that involves a slowing global economy with a strong dollar, weak commodities and a fear of deflation, or a general decline in prices. They’re also grappling with the prospct that global growth next year will slow more than originally feared, cutting demand for gasoline and other crude products.
“We’re seeing a massive readjustment on a historic scale,” he said. “We’ve never gone through anything quite like this.”
“Oil slips below $58 on global growth pessimism”
It’s a shame that the laws of supply & demand don’t eventually win out…
Just filled up yesterday at $1.95 a gallon.
Kind of puts a temporary crimp in the tree-huggers dream of $5.00+ a gallon. But give them time, they will figure out a way to put a larger ban on oil development to drive the price back up again.
Gonna’ make it harder for those nukes, wind farms, solar farms, etc.
Oil will be king as long as it’s cheap.
# 3 geofgibson said, Gonna’ make it harder for those nukes, wind farms, solar farms, etc.
Oil will be king as long as it’s cheap.
Actually, oil isn’t much used for electricity production. Nuc isn’t used more because Carter initiated actions to kill it and subsequent politicians have maintained that due to being paid off. Solar isn’t big because the cost per KW is higher than fossil AND nuc.
#4 – Paddy said, “Actually, oil isn’t much used for electricity production”
True, natural gas and coal are most used. Your average environmentalist whacko usually doesn’t make the distinction since “earl is baaaaad!”
#3 I share the concern, but things have changed a little bit.
As someone who is working in the alternative energy sector, the current trend is actually good for us. Operation and exploration is actually cheaper while demand for alternative energy is still high. Investment funds for alternative energy production is still out there regardless of the financial crisis. True, is has slowed down, but with each new project, funding is generally available. I believe that the latest oil crisis taught us not to be depended on outside sources, and that local diverse renewable energy is the way to go. For the auto industry things might be different – good or bad – but it would take at least a year or more before there will be a visible slow down from where I’m sitting. A year or two is a long way off…
I once predicted $7 a gallon by Christmas.
ofc it’s rigged.
in july (around the 25th i think) i heard on a radio show that oil was going to be pushed to $50/bbl mainly to bankrupt the middle east oil states. (most of the oil states are budgeted at $70-80/bbl) -which in turn (esp. in the case of OPEC states) would help push the US into a depression.
much more was said in the program, almost all of
which has come to pass.. but lies outside the scope of this article..
nonetheless, all crisis are rigged/engineered.
nothing new there….tho its nice to see someone actually *think it out loud* for a change..
(if china decides to start selling their US T-bills (our debt) to offset their $500bn+ stimulus plan -we gonna be in really deep doodoo)
things that make you go Hmm…
-s
#7 “I once predicted $7 a gallon by Christmas”
-well, if/when the dollar crashes as planned, you may very well become a prophet.. :p
-s
# 8 soundwash said, “(if china decides to start selling their US T-bills (our debt) to offset their $500bn+ stimulus plan -we gonna be in really deep doodoo)”
If they sell them they’ll loose money. Buffett made a good point. China gave financing to the US so we could buy their stuff. We gave them IOUs. They won’t throw them out. LOL
[LOSE Paddy-O, LOSE… not loose. Cripes. – ed.]
Goldman-Sachs today reduced its price target for Google from $500 to $410.
Today Google is under $300.
New rule: if Goldman-Sachs says “buy” – it’s time to cut and run, and short it into the ground.
This is unfortunate.
#11 What’s Googles P/E ratio?
Worldwide the production sources for oil are dropping at 9% per year and requires about $350 billion per year to replace it. With sky high oil prices worldwide replacement barely covered losses last year.
Needless to say, supply will be increasingly constrained over the next few years.
P.S. Notice I didn’t say looses?
That article is wrong. Buying and selling of oil with dollars has nothing to with the price.
Nevertheless your prediction of $40 a barrel is probably right, though Iran seems determined to cause a problem anytime the price drops.
Note that I predicted this drop in prices earlier this year in a thread about people selling their new SUVs. Having the ban on offshore drilling disappear has also had an effect.
“[LOSE Paddy-O, LOSE… not loose. Cripes. – ed.]” – John, Dumbya Bush and Prick Cheney and the Repukes and their RUNNING DOGS OF CAPITALISM ON WALL STREET have been playing FAST AND LOOSE WITH THE DOLLAR for near on EIGHT YEARS NOW !!! So the Dollar could be considered LOOSE, cause it isn’t SOUND AS A DOLLAR ANYMORE !!!
[LOSE Paddy-O, LOSE… not loose. Cripes. – ed.]
Yeah, typos happen with a toddler hitting the keyboard at the same time…
# 16 JimD said,
“John, Dumbya Bush and Prick Cheney and the Repukes and their RUNNING DOGS OF CAPITALISM ON WALL STREET have been playing FAST AND LOOSE WITH THE DOLLAR for near on EIGHT YEARS NOW !!!”
Actually, the Fed has been doing this since its inception. Look at a 200 year $ inflation/buying power graph. Then look at when the Fed took over the money supply…
It looks good now. It always looks good after an inflation of the money supply.
By this time next year, we’re going to see 30% inflation AND 10% prime interest.
You don’t pump 30% more money into the economy and expect nothing to happen.
#13 – Paddy-RAMBO
>>What’s Googles P/E ratio?
18.31
Bring back the 99 cent gas station!!!
May be time to buy a Escalate or Yukon XL from dealerships that are running out of business.
Iv heard that a few locations have gas BELOW $2..in the USA..
one reason the price went up..
WAR..the USA gov spends LOTS of money on shipping things around in WAR.
#23 – ECA
>>Iv heard that a few locations have
>>gas BELOW $2..in the USA..
$1.93 right down the street from me.
Watch for the Automotive Morons to take this as motivation to put their bottomless bailout funds into producing more 8mpg Monster Cars, instead of planning for the future. Then, when oil goes back to $150/gal, they’ll be back sucking at the government teat.
Any bailout of the carmakers should be coupled with a clean sweep of upper management. Get somebody in there who knows wtf they’re doing.
#23 – cont’d
Oh, and no golden parachutes for the dimwitted bastards, either. They can stand in the unemployment and food stamp lines along with the people they put out of work.
I live in Kansas City, MO, and the price for regular 87 octane was $1.759 this morning.
Would you believe that …
oil is priced on Brent crude (north sea and baltic areas) trade in unregulated yahoo chat rooms !!!?
dammit… Dvorak is predicting $25 / barrel… that means that we will see $100 again pretty soon… dammit…
$40 is reasonable, much closer to historical prices if you count inflation. If oil hit the $20 range then a huge number of producing wells would trip automatically into shutdown.
Natural Gas prices are more interesting of course.
/blah blah
#10 Paddy-O good point..
-in that case i guess the other option “to reduce buying T-Bills” will be the
way to go.. though, with oil at $55.85/bbl right now..it seems someone still has faith in the USD(ebt)..
the 10 year T-Bill interest rate is dropping again.. was 3.743% yesterday, today its 3.65%
(that is, if it not being manipulated as well..)
i bet the IMF/World Bank Central Banks and of course, our economic hitmen are just chomping at the bit to start loaning oil asset backed money to the oil states that are on the verge of bankruptcy..
rumour mill says this was the “peacful” way to stop Iran in it’s tracks..let alone start an civil uprise against Admenijad…
also seeing as how Hugo Chavez has thumbing his nose at the U.S. (rightly so, tbh) -i think Bloomberg said he was budgeted at $120/bbl
(and Iran was at $100/bbl, Iraq at $80)
-nice way to slow down his efforts to make an
“opec style” union with the south america oil producers”
i wonder if there are any bets being taken on whether the G-20 summit on Nov 15 will result in the USD being removed from reserve currency status..
#11 chuck said:
“New rule: if Goldman-Sachs says “buy” – it’s time to cut and run, and short it into the ground.”
-words to take heed to.
i’m finally beginning to understand why all my wall street clients hate Goldman-Sachs..
—
#16: you naivety precedes/betrays you..
you would do well to investigate further, Paddy-O’s comment about The Fed in #18.
—
#19 -only 30%?? -with all the mad printing The Fed is doing, i’d be surprised if we still have the clout to even keep the USD as a valid currency. Nov 15 summmit G20 should prove very interesting
-esp given that Paulson confirmed today he’s going to use the $700bn scandal to buy banks, instead of mortage assets. doesnt look like he’s interested in getting the US economy on its feet.
since it fiat money, they should have taken that $7trillion (or more)created from the $700bn borrowed to capitalize 10 new US Based banks run by Uncle Sam (and not the privately owned Federal Reserve bank) with complete open book oversight to congress *and* John Q. Public.
that would have opened up credit lines to the public, LC’s, and whatever else is needed to get crates of goods sitting in warehouses overseas on US bound ships (esp while shipping fuel is low) -yada yada yada…
Unless the massive behind the scenes manipulations continue and all the countries
at the G20 summit look the other way..i dont see how the rest of the world let us continue to borrow from them..
of course, iirc, war is another option out of this.. in that case, we should all move to Paraguay.. -5 harvests a year, all the electricity you need generated by hydro electric, nice climate, sits on top of a huge aquifer, has lots of natural gas…doesnt have a war crimes extradition law, its below the northern trade winds so you dont have to worry about fallout from bio-nuke wars in the northern hemisphere….
-ok..i’ll stop. -you guess (or google) the rest.
-s
ECA, I just saw regular unleaded for $1.90 in the Dallas/Fort Worth area. Sub $2 is already here.
My theory is that all the oil futures speculators got slammed in the mortgage/monetary crash. Cash is tight now. They are all keeping their speculation cash funds close tightly in their wallets. The speculators are likely long gone (for now) and $2-$2.50 gas is where the price should have been all along.
Personally, I think that no one should not be able to buy a commodity unless they have the means to actually take delivery of said commodity. That would mean that a dentist in Des Moines could not buy $100,000 in leveraged oil futures. Not unless he has a fleet of tanker trunks and a oil storage facility.
However, if that same person wants to buy gold futures, let him knock himself out. But he better be prepared to take delivery of a crate of gold bullion.