Oil Prices: When is the price 'good'?

[Dutch]

We've all seen oil prices go up above $100 a barrel and the media portrayed that as a bad indicator of the economy. Now it's $36 and the media portrays it as a bad indicator of the economy. What am I missing?

[Dr. Sak]

Media = Idiots?

[Kodos]

It's all bad all the time. Panic and watch us!

[JediKooter]

Dog and cats living together, mass hysteria!!!

[Pumpy Tudors]

I just drew a picture of 6 dogs and 12 cats living in sin. I'd post it here, but I don't have time to upload it because the company president is making me clean out my desk. I guess he didn't think the picture was poignant.

[gstelmack]

Media = create crises to sell papers, because happy-happy doesn't sell.

Yes, any economic news = bad in this day and age. I pointed it out in one of the other threads, but they're also upset because people stopped getting credit and started saving, which everyone has been pushing for for a LONG time.

[JediKooter]

I just drew a picture of 6 dogs and 12 cats living in sin. I'd post it here, but I don't have time to upload it because the company president is making me clean out my desk. I guess he didn't think the picture was poignant.

He sounds like a very unfunny man.

[RendeR]

Anything under 50 bucks a barrell is a good price.

[path12]

It is bad because it shows that demand, particularly industrial demand, is tanking (pardon the pun). Lower industrial demand = less manufacture = less jobs = longer r(d)epression.

[-apoc-]

I thought it was more prices over $100 are bad for the economy while prices under $40 are because of a bad economy IE no demand. So 60-75 is probably good then :)

[path12]

I thought it was more prices over $100 are bad for the economy while prices under $40 are because of a bad economy IE no demand. So 60-75 is probably good then :)

From things I've read you're just about spot on -- current oil production levels should be supporting a price of around $70 if I understand this shit correctly, which I very well may not.

[SportsDino]

The media simply does not know shit. They are so busy trying to explain something with some random ass excuse, they don't realize it is completely the opposite of anything they said the day before.

Oil price is being pushed down by a (possibly irrational) belief that no one is going to produce anything in the coming period of time. The thought being no one is going to be buying so who is going to pay full price.

It is at the point where real oil producers and consumers are changing their behavior to stuff we would all consider abnormal, if we were not constantly thinking of things in terms of speculative spot prices.

An oil price of $70 is probably a lot more realistic than the current price, just like it was a lot more realistic than the $150 price. Sheepvesting is pushing the price to extremes, but it will need to adjust eventually unless we truly do have so much oil that can be produced for 30 bucks that producers will just line up to pump it. My belief is cost of production alone is enough to force an adjustment, if not the unquenchable thirst of developing countries willing to swoop in and buy the oil while we act like morons.

[SportsDino]

dola, I'm surprised the government hasn't decided to expand the strategic oil reserve, top off the tank as it were. I think this is on the level of obvious headshaker about five years from now when we are still transitioning off of oil dependence (alternative technology is not going to adopt itself overnight even if it did exist in technology).

[path12]

You may be right, I'd definitely agree on you about the media but am not savvy enough on this to comment re the prices.

One thing that worries me is that a prolonged oil slump may have some real effects on oil producing countries with shaky economies -- i.e. Russia, Mexico, Venezuela, etc. Not hard to forsee problems when one's only cash cow is tits up in a bad global economy.

[JediKooter]

What happened to the excuse that it was the huge rise in demand from China and India that was driving up oil prices?

[Noop]

I thought it was hedge funds driving up the demand for Oil.

[lungs]

Drill baby Drill!

[Lorena]

I don't see milk getting cheaper, I thought the whole reason food prices went up was because of gas prices.

[remper]

lol, it's called coordinated price gauging.

That's my conspiratorial (if thats a word) thought.

But probably we'll start to see other prices come down over time if these oil prices stay low. I'm assuming anyway....

[path12]

What happened to the excuse that it was the huge rise in demand from China and India that was driving up oil prices?

Worldwide recession. China and India are caught up in it as well.

[Buccaneer]

The current price for oil is bad because certain segments cannot use it to attack the Big Oil Bogeyman.

[JediKooter]

Worldwide recession. China and India are caught up in it as well.

Ok, I can see that.

Then why does OPEC want to reduce production to raise prices for oil that nobody will buy at the moment? Wouldn't it be smarter to cut production when the recession is over?

[PurdueBrad]

I don't see milk getting cheaper, I thought the whole reason food prices went up was because of gas prices.

Just like the delivery charges that all our local restaurants added. When gas was high, it made a bit of sense. Gas falls, charges stay. Nice.

[lungs]

I don't see milk getting cheaper, I thought the whole reason food prices went up was because of gas prices.

Ask the grocers. The price sure has gone down for us farmers.

[path12]

Ok, I can see that.

Then why does OPEC want to reduce production to raise prices for oil that nobody will buy at the moment? Wouldn't it be smarter to cut production when the recession is over?

Well, there is still demand, just not enough to support the current level of supply. I guess their thought is that by reducing production they'll get rid of the surplus and get a better price.

But Russia for example is really cash-strapped right now and oil is their main export -- are they going to agree to reduce their output? Is Venezuela? Mexico? I don't think it's certain that OPEC will be able to keep all their members agreed on a production level with the larger socioeconomic situation.

[sterlingice]

The current price for oil is bad because certain segments cannot use it to attack the Big Oil Bogeyman.

Yes, that's it :rolleyes:

SI

[SportsDino]

I thought people finally realized the $150 oil was a bubble by now? Prices don't double in a year when supply and demand are relatively the same (no one can convince me that China/India put out enough requests for oil to cause the run up).

We are dealing with speculators that have had billions in leveraged money behind them, my hope is that some of them get bloodied up enough that the games stop being played and prices make some sense. Right now the low prices are a reaction too far the other direction and will look silly in hindsight.

[sterlingice]

Well, if you look at the futures market, oil is around $70 a barrell beyond this year, which is about right. It's just that in the short term that prices are depressed.

SI

[Dutch]

(http://www.yahoo.com/s/1047560)Oil prices climb above $52 a barrel on stronger Asian markets (http://www.yahoo.com/s/1047560)

KUALA LUMPUR, Malaysia – Oil prices rose above $52 a barrel Monday in Asia, boosted by stronger Asian stock markets amid plans by the U.S. government to buy bad assets from banks to contain the financial crisis.
(http://www.yahoo.com/s/1047560)

Looks like $52 a barrell is worthy of good news now. This generally positive AP article got front page play on Yahoo! News.

[Dutch]

Back above $50...good news!

Oil prices rise above $50 a barrel on signs U.S. consumption up (http://www.yahoo.com/s/1055713)


SINGAPORE (AP) -- Oil prices rose to above $50 a barrel Thursday in Asia as stronger-than-expected results from U.S. retailers suggested the worst of a plunge in American consumer spending may be over.


No word if dropping under $50 is bad news. In any event, so much for the theory that 'bad news sells'. Twice now the price of oil has been mentioned on Yahoo! News headlines via an AP article since the Obama inauguration and both have been very positive. Every single article regarding the price of oil during the Bush admin was negative.

[flere-imsaho]

Hi there Don Quixote.