skillet:

Some predictions say $200 this year, $150 may soon be a fond memory!

Some predictions said gold would hit $1100 a troy ounce.  It got to $1033 and now is below $900.

Gold and oil aren't the same but I don't think all of the short term increase in the price of oil is due to increased demand - much is due to speculating.  And sky high oil prices will dampen demand and incentivize developing alternative sources of energy.

Long term I do see an upward trend, but first we will see this bubble burst.

I doubt that we will see the bubble burst, but oil is probably  due for a correction.  Some of the price of oil is because of the declining value of the USD.  A case can be made that the decline of the USD has stabelized, at least for the short term,  consequently commodity prices including oil should stabelize a bit also.

  Secondly, much of what I have read confirms your expectation that supplies are more than adequate at the moment so I do not understand why there is any upward pressure on prices.

  The speculation part is more difficult to get a handle on, but a glance at the daily volume chart for DUG gives an indication of how the short sales have increased.  All those shorts have to be bought back sometime, so they are a bullish indicator and might be the only thing supporting the current price of oil.  An incident that could create a short squeeze, could also create a spike in the price of oil and then a correction.  Right now, I am waiting for the spike.

jmho

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uncleharley:

Secondly, much of what I have read confirms your expectation that supplies are more than adequate at the moment so I do not understand why there is any upward pressure on prices.

It's called "too much money produced by the Fed". It has to go somewhere. Of course to the one that do not believe we have inflation will not buy this theory, but will scratch their head and say

"supplies are more than adequate at the moment so I do not understand why there is any upward pressure on prices"

It's like saying you don't believe cholesterol can clog arteries, therefore you don’t understand why there are heart attacks... What else is new in paper fiat land?? If you don't buy the theory the CPI is bogus, you'll always get the commodity price wrong, scratching your head wondering why prices are so high. The answer stares right at your face, it's called  "INFLATION".

A couple of weeks ago I heard a talking head saying that other than food and energy high prices we have no inflation. So folks, here is the inflation secret: If you want to know if we have no inflation, do not eat and do not heat your homes or fill up your gas tank, and you'll find out that we have no inflation... Laughable to say the least.. Oh, and the CPI story that food and energy should not be included because people will use substitution. That’s another cinderella theory. Go tell the Asians to substitute rice (which has double in prices the last few weeks) with pasta (which is a lot cheaper…) Once again, the fiat paper folk’s theories are laughable to say the least

Oh, and one more thing. Someone here said the CPI is credible because the market buys it. Then why are the 10 and 30 year bond market yields rising? Perhaps even the market is buying the "CPI BOGUS" theory and smells high inflation on the horizon? yeah, maybe, just maybe, something for you folks to think about...

Going back to oil. I gave my input in this link. Of course, no one bother to reply. But that's ok folks, what else is new...

uncleharley:

I doubt that we will see the bubble burst, but oil is probably  due for a correction. 

A short term correction is a bubble bursting in my parlance.

I agree there will be a long term secular bull market in oil, though.

openhurdle:

Going back to oil. I gave my input in this link. Of course, no one bother to reply. But that's ok folks, what else is new...

I replied.  I don't see it getting to $150 in the short term.

Check out the volume in DIG and USO. There are also a lot of longs out there and they will have to sell if the price drops. If the price drops it will be to late to get in. I always feel right with a trade if it makes my butt cheeks start chewing up my seat cushion. Besides, I can hold, because my position in DUG is not on margin.

Happy landings!

chili    

openhurdle:

It's called "too much money produced by the Fed". It has to go somewhere. Of course to the one that do not believe we have inflation will not buy this theory, but will scratch their head and say

"supplies are more than adequate at the moment so I do not understand why there is any upward pressure on prices"

It's like saying you don't believe cholesterol can clog arteries, therefore you don’t understand why there are heart attacks... What else is new in paper fiat land?? If you don't buy the theory the CPI is bogus, you'll always get the commodity price wrong, scratching your head wondering why prices are so high. The answer stares right at your face, it's called  "INFLATION".

A couple of weeks ago I heard a talking head saying that other than food and energy high prices we have no inflation. So folks, here is the inflation secret: If you want to know if we have no inflation, do not eat and do not heat your homes or fill up your gas tank, and you'll find out that we have no inflation... Laughable to say the least.. Oh, and the CPI story that food and energy should not be included because people will use substitution. That’s another cinderella theory. Go tell the Asians to substitute rice (which has double in prices the last few weeks) with pasta (which is a lot cheaper…) Once again, the fiat paper folk’s theories are laughable to say the least

Oh, and one more thing. Someone here said the CPI is credible because the market buys it. Then why are the 10 and 30 year bond market yields rising? Perhaps even the market is buying the "CPI BOGUS" theory and smells high inflation on the horizon? yeah, maybe, just maybe, something for you folks to think about...

Going back to oil. I gave my input in this link. Of course, no one bother to reply. But that's ok folks, what else is new...

Excellent post (and rant), Openhurdle. All I got to say is...stay tuned for continued hyperinflation...200 USD/barrel oil...5.00/gallon gas...maybe a few drops in prices here and there along the way just for kicks...in a society designed around oil...high food prices...high energy prices...all due to a continually falling dollar...just remember the simple equation:

Inflation = falling US dollar

We are told to invest in equities to curb inflation, but how can equities do well in an hyperinflationary scenario?

Wow, my face is totally in the dirt on predicting oil prices.  I could drill my own oil well with all the pounding I took on this one.  The good news is I was long the whole way.  The bad news is I took 50% of my money out of this play, and used it to short the market.  Not the BEST decision I have ever made.

Note to Self:  Do not market time bull market moves.  Just STAY IN.  jeez...

Link

I said in the above link of a good possibility of a blow off top to $150 Oil. Well here we have it. So far every Oil call prediction I've made since Jan 2007 has been right on the money. And who said "You're not worth listening" ? Ahhhh our beloved Judyken...

BTW, $150 is only an intermediate top in Oil price, not THE top. Big difference...