Oil nears $120 following labor and military strikes

[1CAVCCO15MED]

Net profit is what you get to keep, period.

[SuperScout]

Originally Posted by 1CAVCCO15MED

Net profit is what you get to keep, period.

... and net profit is really irrelevant without first considering profit margin.

[1CAVCCO15MED]

But really, profit margin is just really a useless snapshot by itself. It says nothing about past performance or industry average. A better indicator is the PE or profits to earnings ratio. It is what investors use most commonly as a comparative measure. Now what is considered a good PE ratio varies with the industry. Take the oil lobby. For an outlay of $115 million in campaign contributions to both parties in the years 2001-2005 they recieved a return on investment of $6 billion in tax breaks. That comes to a PE ratio of 51, roughly. What that means is for every $1 invested they got $51 dollars back. It seems good to me but to another industry, say cocaine, that might be seen as a very bad period. I looked up a representative PE ratio for the oil industry and it is around 9.5. Now that sucks to a lobbyist but look at it this way, oil lobbying is a very lucrative sideline to the oil industry. I wonder what they would get running a whorehouse? Oh that's right, they do. Congress.

[Jerry D]

In the paper today they had an article about the Food shortages in the world and most were caused by the droughts we have had the last two years all around the world. The US corn and grain production has dropped many billion tons from the drought and so has the rice and sorghum production around the world. Most of the developing countries like China ,India, and Russia have stopped exporting grain due to their droughts and low grain yields but the UN and the rest of the EU are only concerned with our 15-25% increase in Ethanol production because they will actually find schnooks in the USA and world to believe we are the bad guys in the world food shortages not the Nice Arabs and Latinos of OPEC, btw did you all know most all of OPEC are major grain importers so they have to spend more of our gas money to buy corn so the more corn we make into Ethanol actually hurts the profit margins of Iran and Venezuela. I can't wait to see Cindy Sheehan and Hugo Chavez complaining that we are starving the poor in Venezuela and Iran from our corn to ethanol production....
If the good folks at "Bombs are us" in Iran would lower oil prices and boost oil production it wouldn't be cost effective to make ethanol out of Corn and we could sell the surplus corn to Mexico so their poor could have their tortillas and Tacos again at nickels per pound instead of dollars per pound again as we would be getting 65$ oil again but thats silly talk thinking OPEC cares about the poor in other countries starving when the good people in Europe and the US will feed them...

[exlrrp]

Its interesting to read all the responses and try and understand the sophistry the fat headed conservatives spin about it. As usual their primary aim is to deflect accountability from the most inept and incompetent president in history.

First lets reiterate this fact: Gas prices have TRIPLED under less than 8 years of the Bush administration. There seems to be no argument here about that--- because its true There is no other 8 year period at ANY time in our history when the price of gas tripled and the price of oil quadrupled.
And presidential policy has nothing to do with it? SO I guess you conservatives all think all the previous presidents were just lucky then? Governmental and presidential policy had nothing to do with it?
What did George Bush do after 911? did he tell people that there was a long row ahead and they should tighten their belts? No, he said the best thing they could do was go out and spend. Buy buy buy, borrow borrow borrow. Thats the Bush era ethic: and george Bush led the example on borrowing: as president he has borrowed more money THAN ALL PREVIOUS DEMOCRATIC PRESIDENTS COMBINED!!!! Not only have gas prices tripled under Bush but the national debt HAS DOUBLED!!George Bush has signed for the highest budget deficits--and the most earmarks!-- in American history, put in front of him by a Repuglican Congress. Lets see how you’re going to blame THAT on the Democrats.(and I sure bet you will) Bush and the repuglicans hold the current record for the highest deficits: $414 billion, 2004. they also own the 2d (2003) and the 3d (2005) also.

Are conservatives going to pretend that has nothing to do with oil prices? Lets look at the connections: one of the reasons gasoline is getting so high is that the dollar, under the Bush administration, is now worth less than the Swiss Franc. the dollar has fallen 100% against the Euro in the Bush era, creating a scene where the ever cheapening dollar has ever less power in the world against the Euro and the yuan. Whats the cause for the decline of the dollar? Bush administration policies and nothing but. Its been the Bush administration's, and the republicons, policy to borrow ALL the money for the war on Iraq. Every nickel spent in Iraq is borrowed, to be paid back by future generations---could there be a more cowardly outlook? What ever happened to "Pay as You GO?" That died in the Bush era also, a concept Repuglicans created to flog Democrats with in the 90s but didn't have the balls to make so when they came into complete power. Never came close, never even tried.
george Bush and the republicons NEVER balanced a budget, they just can't do it. So much for the "fiscally conservative" party! And “Harvard MBA” presidents!!

Bush's economic policies leading to weak dollar/high deficits have everythingto do with the price of oil and the cheapening of the dollar but there's a lot more to it. Of course the war that Bush lied our way into has a huge effect. (see the 935 documented lies of the Bush administration at: http://www.publicintegrity.org/WarCard/ ) Oil supplies from the Mideast have been severely disrupted all through the war and will continue to be so---this drives the price up. Bush and the repugs thought the oil would flow freer after the war---just another of their idiotic ideas that didn't work, like "the war will pay for itself" (Bill Kristol). (Or did they? I'd sure hate to think an American president started a war he then profited on---but both Cheney and Bush have evidently done so.)

The sickening Bush economy has a whole lot to do with the price of oil. China has been posting double digit growth for decades---the best the Bushies can squeeze out is 0.6% after 7+ years in power!! (Latest quarter: http://www.bea.gov/newsreleases/nati...ewsrelease.htm )And thats 7 plus years AFTER the legendary tax cuts that were supposed to make the world all wonderful again!! How wonderful did it get?? 0.6% growth isn't wonderful after 7 years of Bush monetary policy, its REALLY LOUSY!! The fact is that Bush and the repugs can’t do business as well as the Commies!!
Wanna pretend the Bush administration policies had nothing to do with that?? That taxcuts spur growth over the long run?? And how about the economic "stimulus? Every dollar that gets kicked down to taxpayers is borrowed!! (More Bush era policy) So ultimately you, as a taxpayer will have to pay back what you get, with interest, to kick up George Bush's final economic numbers. Borrowing money to pay back investors is the classic definition of a Ponzi scheme---and that states Bush's economic policies precisely. Repuglicans just won't believe you can't borrow your way to prosperity. America should wipe its collective ass on Bush’s MBA diploma, if there is one( ever seen it?)

So when Bush and the repugs claim there's no magic wand that make things better, theyre right as far as it goes: the whole truth is there's no magic wand to get us out of the hole they dug. Where we are in the world is an exact reflection of where the current leadership’s policies have taken us. The “Decider” decided us into a whole lot of this. Do Pelosi and the Dems have a better policy? Well, judging by the current state of our economy and gas prices, they couldn't do much worse.

There's a lot Bush could have done to make things better---like endorse and boost gas conservation---we've never heard a word about oil conservation from the Bushies, BNo, that’s for weakkneed Democrats like Jimmy Cartern Their only answer is to drill more. Bush and the Repugnicans could have raised CAFE gas standards and a variety of other things but the icon car for their times is the Hummer, military version, the epitome of conspicuous consumption (Ahnold the governator has 3!).

the Repugs have no new answers, only the same tired old "Blame the Democrats" (who they blamed for the oil spike in 2000, by the way)America is stifling from public debt, negative job growth, anemic GDP growth, huge price rises in gas and food across the board, a completely deteriorated infrastructure, a depleted and exhausted military and the only thing they can think to do is make the Bush taxcuts permanent that caused the huge deficits in the first place. Bush and the repugs have never paid for the taxcut, they’ve only signed for huge deficits since then. Think that hasn’t ultimately played a huge part in Oil prices? You probablywouldn’t---if you were dumb enough to vote for Bush. Here’s another shock for you, repugs: there IS no free lunch---and all you’ve done is put our national Visa on meltdown.

Bush and his policies have only left the US weaker than when he started, in about every area. Youre NOT better off than you were 8 years ago----unless you were wealthy to start with.

Vote Democratic in November----America just can't afford another repuglicon president

Stay good....or as good as possible under republicon rule
James

[1CAVCCO15MED]

Much as I dislike the Republicans, the Democrats betrayed me first. Give either party full rein and I end up getting screwed. the closest thing to checks and balances in this special interest run government is to have one party in control of the White House and the other, in control of the Congress. That really doesn"t work either, they just battle for four years with their hands around each others throats. That was what was going on when 9-11 was being planned. One of the few times they cooperated got us the Free Trade Agreement.

[1CAVCCO15MED]

You don't have to care about whether the world starves or not to realize that corn going into your tank used to go into your beef and pork. So pay sky high prices. At least we are not "those people".

[DeadlyDaring]

Heard on the wireless coming from OPEC this morning, that the price of crude oil should be less than $80 as they have not decreased any oil output and in some places have increased. The reason for the difference in price, is because of the speculators that have driven the price up

Now that is ruffly what I posted here earlier...Go figure!!!

What about China's greed for oil they will pay anything for it BUT! WHY!!!!

[DeadlyDaring]

http://www.tehrantimes.com/index_View.asp?code=168310

NEW YORK (Thomson Financial) - Oil prices will drop “significantly” from the current record level to below $100-a-barrel by the end of the year, a new survey of oil and gas executives showed.


The survey results came as crude futures prices surged to a record above $126 a barrel Friday, fueled by weakness in the U.S. dollar, worries over supply disruptions and speculative demand.

About 55% of the 372 financial executives from oil and gas companies surveyed by KPMG’s Global Energy Institute think that crude oil price will drop below $100 by the end of the year, while only 9% believe it will close at above $120.

Some 21% of the executives think oil will close the year between $101 and $110, while 15% think it may end between $111 and $120.

What’s more, the survey found that while 44% of the respondents felt prices would peak by the end of the year, a further 39% thought that they would not peak until after 2010.

Crude for June delivery touched a high of $126.20, before pulling back to last trade up $1.12, or 0.9%, at $124.82 a barrel on the New York Mercantile Exchange.

Oil prices have doubled over the past year. About 63% of oil and gas executives believe that growing demand from emerging markets is the major contributor to the high price of oil.

[DeadlyDaring]

Mukul Pal / New Delhi May 12, 2008

http://www.business-standard.com/com...o=322617&tab=r

Nothing can rise exponentially, even if it is crude Oil. The asset's exponential rise is more an indication of an ending trend and not vice versa.

There aren't any chilly warnings of Oil heading to $200, like many in OPEC believe. Does OPEC really know? The axiom linked with $40 plus Oil, as harbinger of recession has been long trashed and now not only we are waiting for recession but also for $200 Oil. It all seems a bit strange.

Oil moved up three times from the $40 mark and DOW is still at 13,000, just 7 per cent lower than historical top. So, either the other best indicator for recession that is S&P500 and DOW Jones have stopped working or econostats have blinded us.

For a start, there are some common sense rules, which say rockets come down to earth and satellites remain in the sky. The way Oil is behaving makes it either a rocket potentially getting ready to become a satellite. This all is an illusion. Oil can never become a satellite, no asset can. And, the almost ninety degree inclination to new highs is destined to collapse. And, what will collapse along with this is the dream of Oil riches.

It is how you look at it. Bloomberg Markets looked at it as the End of Oil era and a few Wall Street brokers looked at it as a great time to solicit mass mailing lists for Oil Call options. Well, we don't subscribe to the Oil end era yet, but if the best broker suggests buying Calls with such confidence, we definitely don't know something he knows or something everybody knows. But that is good, if we don't know, what everybody knows. Because if everybody knows something it is already discounted and the truth is already out there that Oil is topping.

Of course the reason of the fall when it happens will be like this, winters were cold so Oil rose and summers are hotter so Oil is falling. When Oil falls in winters, which it did from 2000 to 2002 and later in 2006 to 2007, the winters were warm. For us, Oil is more of than a climate barometer. It is like all other assets, which are connected with 0.5, 4, 11, 30, and 90 year cycles. And all these time cycles can explain cycles of inflation, deflation, disinflation, food, gold, equity, recurring geopolitical crisis, interest rates and also how you should handle your portfolio within the year. It also tells you about what is going to happen to Oil in 2012.

At this stage, what can be seen is a sentiment euphoria, which is hard to sustain. The five legged fractal structure both starting 1999 till 2008 and the smaller five legged sub structure starting in 2007 seems complete. And, holding one's impulses to ride on this rocket seems reasonable. FIB and CHANNEL targets lie at current levels. We don't see Oil above $125 at this stage and our research impulse (we are humans too) shows more of a Put than a Call.

What will happen can also be explained with another magical previous 4 rule. Price impulse moves in a five wave structure. And, you can label them like a school exercise of counting 1 up, 2 down, 3 up, 4 down and 5 up. Now this exercise can be done on a large (multi year) time frame and a multi day time frame. This is what we keep mentioning as mass psychology fractals impulsing again and again at all degrees. It is the magic human nature plays with precision.

After every impulse the markets take a pause and fall in three wave structure (a down – b up – c down) and then the impulse starts again in an unending process. That is why we say that world may never come to end, it is just that some time the volatility of relentless market action just becomes too much for a society looking one way. This always happens, like the sub prime mess and the credit crisis. We all look up to Oil now and not Natural Gas, which is the next multi year outperformer. We love to see rockets and ride them, other thing don't excite us.

So, whenever an impulse (five legs) takes a pause they fall to the previous 4 wave. This is a much witnessed event in fractals. Previous 4 wave supports are also mentioned as the last supports standing. Prices should not fall below the previous 4 wave or rise above the previous 4 if the trend has to continue. Of course this is a guideline, but this appears more time than coincidence.

This is seen everywhere, BSE Oil, BSE CG, BSE Bank, BSE Auto, Sensex, Nifty and CNX IT. They are all full of previous 4 wave retests. Oil, when it turns down, could fall to first a previous 4 wave support at $90. And if it indeed breaks that, we can be in for sub $70 levels. And this we are talking about the next few months, of course we can be wrong. But, not like the poor chicken, an anecdote quoted by the late A J Frost, market guru.

The chicken used to run at the presence of the man, but man's appearance on the scene was linked with corn. This happened 999 times, till the chicken went to thank the man and had his neck sliced. Though anatomy proves that we are sheep and herd, we indeed might be chickens when it comes to cause and event linkage. We are miserable here and believe summers and winters drive the Oil rocket. Indeed a poetic tragedy.

The author is CEO, Orpheus Capitals, a global alternative research firm