$20 per barrel oil in 2009

[leonleon]

Magkano kayo isang litro ng gasolina kung ganun?

According to the article, the last time OIL was trading at USD 20.00 / barrel was in Feb. of 2002.

If I remember correctly, the price of unleaded gasoline (Caltex VORTEX Gold, specifically) then in the Phils. was only P 16.00 per liter give or take a few centavos, with a prevailing USD to Peso exchange rate of USD 1.00 to P 52.00.

[leonleon]

read carefully



notice that he just focused on supply and demand fundamentals

he totally left out casino betting and inflation hedging by market players who are not commercial users of oil (those fundies)

it's obvious to anyone who has been following the markets that supply and demand is not the only factor that affects oil price

he didnt even mention how the value of the USD strongly affects oil price

From the article:

"...said Verleger, who correctly predicted in 2007 that prices were set to exceed $100"

But he did correctly predict that it will exceed USD 100.00 back then. So won't he be using the same "techniques" he used in 2007 to make this new prediction?

[tidus1203]

Yeah the media always like to sensationalize things, this article included. There is a very popular saying in the financial market industry and it goes like this... "Past performance does not guarantee future results". So does not mean he was right before he will be right again. Peter Schiff predicted it, Jim Rogers predicted it but hell these two guys would laugh out at the idea of $20 oil barring its no longer the energy commodity of choice.

[uls]

From the article:

"...said Verleger, who correctly predicted in 2007 that prices were set to exceed $100"

But he did correctly predict that it will exceed USD 100.00 back then. So won't he be using the same "techniques" he used in 2007 to make this new prediction?

anyone who followed oil price back in 2007 knew it would go above $100

for oil price to drop to $20 per barrel this year, the USD should strengthen substantially.

the USD index should rise above its March peak



when the USD index was at its peak in March, oil was 40+ dollars per barrel



do you remember what it was like back in March?

the market was expecting Armageddon

everyone was scared to death

everyone dumped stocks and commodities and went to cash and treasuries

so for oil to drop to $20, something big has to scare the hell out of market again

something like the failure of a major financial institution (like Citigroup)

will the USG allow something like that to happen?

unlikely

[tidus1203]

Hey uls pansin mo yung USD index chart parang double top ata yan ah... Ngayon ko lang napansin when you posted the chart. Hehehehe double top is a bearish sign, looks like USD has more to fall in the coming months.

[innoBOB[09JmtG]]

mas maganada sana kung 20 etot per liter...

sarap mag drive nun

[CVT]

Keep the faith, bro.... :hysterical:

8303:dishwash:

[uls]

Hey uls pansin mo yung USD index chart parang double top ata yan ah... Ngayon ko lang napansin when you posted the chart. Hehehehe double top is a bearish sign, looks like USD has more to fall in the coming months.

yep pansin ko

the first top was after Lehman (when the financial system almost collapsed so everyone went into safe haven USD cash and UST)

then remember in december 2008 the market turned bullish?

the USD was sold off in favor of risk assets

then pag pasok ng 2009 nagkaroon ng fear na babagsak ang Citigroup

that's the second top (takbo uli sa USD cash and treasuries)

now that the USG/Fed has bailed out and backstopped everything in sight, there's no longer concern for Armageddon

so there's less demand for USD... which is bearish for USD

which is bullish for oil

[uls]

i'm not saying $20 oil is totally impossible this year

anything's possible

what i'm saying is that for oil to drop to $20, it has to take more than fundamentals (low demand, high inventory, large number of floating storage)

oil (as an asset) is a risk bet

it is a bet on inflation

oil is a hedge against the falling USD

oil price moves opposite the USD

for oil price to drop to $20, some event has to drive the USD upwards substantially

[tidus1203]

Pero I am betting HERE (you can quote me) that $20 is NOT POSSIBLE.