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Senior Contributor

Crude oil slipping

Saw an AP report that shows crude oil's in for a week of correction after spiking prices last week. One analyst says a "larger decline" could be ahead. What do you think? Think we'll see $3 gas again before we see $4 gas again after it gets below that level this time around?

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9 Replies
Veteran Contributor

Re: Crude oil slipping

I think there is a more likely chance gas will be $4.50 than $3. The big oil companies are expecting a big increase in crude and natural gas prices.

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Veteran Advisor

Re: Crude oil slipping

Well JC I think the dollar is gettin the ole uncle sam in combat boots  bump right now. That is putting pressure on all commods. But don't worry this to shall pass. When it does this gas market will move higher. I am not thinking that we move as high as I had previously believed. ( 175 a bl)  but I do think that 130 is still doable. This economy has slowed to much. Therefore the stocks keep building and we will bump our heads against consumer demand. That is why beef is taking it on the chin again.  Dairy is starting to really struggle again.  This is gonna be hard on the grains for awhile. Maybe this time they don't move higher as the dollar moves lower? 

Gonna plant some corn today ( I hope) still frost in the ditches this morning.

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Contributor

Re: Crude oil slipping

Don't we have plenty of oil and gas laying around right now? $4 certainly gets lots of folks attention and would a 10% reduction in demand be out of the question given the shakiness of the economy (regardless of what the administration or news folks say).  

 

It's seems like long term the economy doesn't really have a way to get better.  Folks suggest a service based economy and manufacturing based economys are the same, but really not at all.  Some even suggest we make just as much stuff, but the truth is we only make pretty expensive stuff and while the dollars may be similar to the past, the number jobs are not.  I realize part of the problem is the idea that everyone should make $40/hr w/benefits which makes manufacturing anything less than microprocessors or cadillacs about impossible.  That said though when folks are no longer making things that can be sold, used to make something else and even resold at some point (even as salvage) and instead flip burgers there is no further effect of their efforts except creating fertilizer.   There really isn't any wealth being built.  To fix it large companies that should have failed, need to fail.  Government has to get smaller and it will be absolutely no fun, but we've got ourselves to the point where absolute pain is about the only way out.

 

What's that got to do with oil?  Well while a good economy will slow use when gas hits $4, this economy might just pull the plug on fuel usage because there is no choice.  If you are working for mcdonalds you no longer have spare cash to spend on fuel that would have gone to a luxury item (like meat).

 

thanks, Pat

 

 

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Honored Advisor

Re: Crude oil slipping

Two things occur to me this morning, Jeff.
First of all, gasoline prices have ratcheted up farther and faster then crude prices this time, it seems. We have gone through a mental re-set of what is a "good price.". Three dollars seemed obscene a year ago, when average gallon of regular was $2.80. Now, it seems like a real relief.
See how fast that happens?
Second, even though we missed Khadafi last weekend, he got a message...between his family members and Bin Ladin, a not-so-subtle message has been sent to the rest of the world. Whether it is "don't mess with the US," or simply that we will take so much but no more...I think in one weekend, we made it clear that we are not down and out.
All of the monetary and human capital investment we have made in the military, which now equals the rest of the world's defense spending combined, has got to be on the minds of many right now. Maybe there are some who know realize that if we wanted to, we could remove any impediment to our interests.
Dark ops could get to anyone, anywhere eventually. I am not a black helicopter theorist, but we do pose a threat to those who threaten our security, whether physical or economic.
We are waiting for the other shoe to drop. I truly do not think it will take much to trigger large-scale military action right about now. That has to have a dampening effect on a lot of factors.
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Re: Crude oil slipping

Crack spread is different than in '08- if you recall diesel was considerably higher than gas that time- not so this year with gas leading.

 

I think you may see the oil tree get shaken really hard, assuming that geopolitical events cooperate.

 

That would also have some considerable potential to impact grain prices as they are all part of the same money game.

 

What I'd like to see as a real tip off would be anything indicating a bottoming in the dollar which looked possible yesterday but it got slammed again this morning. Currencies tend to be like turning aircraft carriers.

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Re: Crude oil slipping

PS.

 

Stock indices also a key part of the "risk on, all one market".

 

It is only wedenesday morning but working on a big weekly key reversal in most of the indices. See if they can pull that one out of the flames in order to milk it a bit more or if the "we can't all get through this door at the same time" moment arrives.

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Senior Contributor

Re: Crude oil slipping

public is oil crazy  thinks gasoline will be 5 6 7 !!

look at the news,

 

scaring people !!!

 

meantime...    crude oil PEAKED.

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Veteran Advisor

Re: Crude oil slipping

I am in ine of my wierd moods so I thought I would post here just to get your name off the recently posted part of the page! HE HE Just havin Fun!

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Advisor

Re: Crude oil slipping

   $4.00 gas gets peoples attention.  4.50 and higher would be devasting to the economy.  At 9 mpg I would surely thnk twice before making the 120 mile round trip to the cattle auction along with $7.00 corn.

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