Hi guys,
The news on oil price hitting a new record high of $142 today has caught my attention finally.
I read a couple of articles on the 'phenomenon', hopefully to gain some insight into what's causing the price of this commodity to surge to such astronomical level. And at this level, the bulls are predicting high of $160-200. Apparently, this is indeed a worldwide concern, and the media is ever flooding the market place with even higher price targets with all sorts of reasons. This triggers the fear that we 'seem' to be indeed in some kind of oil 'shortage' crisis.
I read a couple of articles on the 'phenomenon', hopefully to gain some insight into what's causing the price of this commodity to surge to such astronomical level. And at this level, the bulls are predicting high of $160-200. Apparently, this is indeed a worldwide concern, and the media is ever flooding the market place with even higher price targets with all sorts of reasons. This triggers the fear that we 'seem' to be indeed in some kind of oil 'shortage' crisis.
For the fun of it, I decided to pen my thoughts on where the price would be going from now.
I am in the opinion that we are about the edge of a bubble, and that, my guess is within no more than one month from today.
Why? The warning signs and logic of my deduction after having witnessed several bubbles:
- In retrospect, nothing in this world (since the beginning of history) goes up indefinitely. Bubbles typically occur between 5-8 years. Oil price surge is now into maybe its 5th - 6th year.
- The oil price chart of the recent hike is at a very steep incline ( nearing 80 degree ) which in my experience indicates an impending huge correction is on the way.
- The volume of transactions has increased tremendously indicating huge participation, which I interpret as for every seller there is a buyer to match. i.e the sellers are out to supply the buyers now.
- Unlike stock/shares which has a 'limited' number in capital, oil , though a 'scarce' commodity is "infinite" ( at least within our lifetime ) , it is impossible for any organised syndicates to perpetually attempt to 'corner' this " controlled but yet 'unlimited' supply. This speculative game the big boys have engineered should come to an end on the fact alone if their objective is to make profit.
- The dollar premium from the cost of 'producing' oil is at least 5 times now, and if the big boys do not take profit soon, while the speculators are still blind about the reality of speculation or greater fool theory, there would not be a better time.i.e contrarian strategy.
- The oil 'story' has garnered sufficient public attention and media coverage and infused its intended effect of fear and greed, which means its a perfect time to unload their piles of oil stock to whom are 'cycloned' into the game of musical chair.
However, can this be a mega-plot at a more complex level, a" financial war' against the Americans by the Anti to cripple US economy through the devaluing of US dollar which is the traded medium for oil, causing inflation, then slipping into recession, and forcing it into a depression while 'sucking' all the dollars into the oil producing countries which are mainly US foes?
Summary :
If this is a typical 'out for profit game' , then I see the peak of oil price in very very near future. If it is a financial warfare, this can become very 'ugly' for the rest of us who are ' financing' the war.
Just for fun,
Cheng Kuan.
the oil price incidentally crashed...within 2 weeks of this 'poison' email:
"A note of clarification for statistical sticklers: The July 11 record of $147.29 a barrel was the highest trading level ever reached by oil. But in print, we typically refer to the highest settlement price at the closing of a trading session on the New York Mercantile Exchange. That was set on July 3, 2008, at $145.29 a barrel." - New York Times
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