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Oil Will Fall Below $35, says Art Laffer (Jan. 2007)


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Oil being slaughtered today, now around $70.

 

OPEC is getting edgy.

 

U.S. fuel demand averaged about 18.6 million barrels a day during the past four weeks, the lowest since June 1999, according to the report. The U.S. consumes 24 percent of the world's oil.

 

``When the U.S. catches a cold, the impact is felt elsewhere,'' said Steve Maloney, a risk-management consultant for Stamford, Connecticut-based Towers Perrin. ``Demand is already down here because of the economic slowdown and should drop elsewhere. Even the countries that recently had dramatic, double- digit growth are seeing their economies slow.''

 

The Organization of Petroleum Exporting Countries, the producer of 40 percent of the world's oil, reduced its forecast for average oil demand next year by 450,000 barrels a day, or 0.5 percent, to 87.21 million barrels a day, in a report yesterday.

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

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  • 4 weeks later...

If you read the other threads,

 

LT: http://www.greenenergyinvestors.com/index.php?showtopic=548

ST: http://www.greenenergyinvestors.com/index.php?showtopic=1157

 

You might find that my own record on calling turns in Oil prices (for many, many years- over two decades)

is not too bad.

 

I am looking for an A-wave low in the next few days (today?) at $56-57.

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Traders Bet Against OPEC, Buy $30 February Oil Put Options

 

Nov. 13 (Bloomberg) -- Oil traders made their biggest bet yet that the Organization of Petroleum Exporting Countries will fail to prevent crude prices from plunging below $30 a barrel.

 

Trades in crude-oil options contracts that would allow the holder to sell oil for February delivery at $30 a barrel reached 1,406 on the New York Mercantile Exchange today, making the contract day's second-most active, exchange data show.

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

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  • 3 weeks later...

Closer and closer.

 

Dec. 2 (Bloomberg) -- Crude oil tumbled, capping a decline of more than $100 from July’s record, on speculation the U.S., the world’s largest energy consumer, may be in the longest slump since World War II.

 

Oil prices have tumbled 68 percent in New York since reaching an all-time high of $147.27 a barrel on July 11. Fuel demand dropped as the U.S., European and Japanese economies slowed. The U.S. first entered a recession in December 2007, the panel of economists that dates American business cycles said yesterday.

 

“It’s all about demand, demand, demand,” said Kyle Cooper, an analyst at IAF Advisors in Houston. “Until we see signs of better economic times, the market is going to move lower.”

 

Crude oil for January delivery fell $2.32, or 4.7 percent, to $46.96 a barrel at 2:41 p.m. on the New York Mercantile Exchange, the lowest settlement since May 20, 2005.

 

http://www.bloomberg.com/apps/news?pid=206...id=aZfNYqvr61iU

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  • 2 weeks later...

Although the price of oil has moved in the direction as predicted by Laffer, he is actually just about as wrong on this as Zapatta George was on the bull side. I don't think Laffer thought the world economy would collapse in the way that it did.

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  • 4 weeks later...
Jan. 15 (Bloomberg) -- Crude oil fell to the lowest in almost four weeks after OPEC said demand will drop this year and U.S. supplies rose as the recession cut fuel use.

 

Consumption of OPEC supplies will shrink 4.2 percent to 29.5 million barrels a day, according to a monthly report released today. The discount of oil in New York to the Brent grade in London widened to as much as $10.79 a barrel today, a record, because of rising supplies at Cushing, Oklahoma, the delivery point for barrels traded on the U.S. exchange.

 

“The overriding factor impacting the market is the fact that we are in the midst of a global recession, which is buffeting the U.S., even China,” said Rachel Ziemba, an analyst at RGE Monitor, an economic research company in New York. “That’s going to be a negative for oil demand.”

 

Crude oil for February delivery fell $1.83, or 5 percent, to $35.40 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $33.20, the lowest since Dec. 19. Prices are down 62 percent from a year ago.

 

http://www.bloomberg.com/apps/news?pid=new...id=aQlNzf77fBXs

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How low will oil go? $20?

 

Oil Could Plunge Below $20

 

Before Hitting Bottom …

 

crude-oil.gif

 

If oil closes below $33, I think it could go to $25. And if oil gets to $25, sheer momentum could carry it to $20. And if it gets to $20, then it could even test its long-term support — just above $17 — before finding a bottom.

 

So is the oil bubble over? Maybe, but you better brace yourself for Oil Bubble II.

 

Why We’ll See Oil Prices Surge Again

 

The fall in crude oil prices is wreaking havoc in oil services and oil drilling. Now, projects and new rigs are being canceled. And that means the flow from new wells won’t be there when we need it later.

 

The number of rigs actively exploring for oil and natural gas in the United States dropped by 21 last week to 1,568. A year ago, the rig count stood at 1,732.

 

http://www.moneyandmarkets.com/how-low-can-oil-go-3-29361

 

 

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  • 3 weeks later...

Art was right, but for the wrong reasons.

 

Economy woes push oil below $34

 

Oil prices have fallen by almost $2 a barrel to below $34 as doubts grow that a US stimulus package will reinvigorate America's economy.

 

Claims for new unemployment benefit remaining close to record highs added to fears of the depth of recession.

 

Even an unexpected rise in retail sales was dismissed as a blip - attributed mainly to higher petrol prices.

 

US light, sweet crude tumbled $1.96, more than 5%, to settle at $33.98 but London Brent added 19 cents to $44.47.

 

http://news.bbc.co.uk/1/hi/business/7887239.stm

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Obvious point really, but if you want to get into oil services companies like Baker Hughes, Halliburton or Schlumberger, then now is the time to do it when you have folk mesmerised by the collapse in oil prices. I am seriously seeking an alternative to cash and am looking at oil services companies. They will be essential in a world desperate to counter the effects of depletion in existing fields (and the world will be that desperate in the near future). They are also quite volatile stocks - high beta - so if you step on at the bottom you'll get a real nice ride up top when the oil price rises again - as it will.

 

I have no particular acumen as an investor, yet over the last four years, my world view has turned out so exactly true that it is kind of eerie. I saw what people in the City paid 100 times what I get did not see. If you understand the energy situation it gives you the kind of advantage of someone who stumbles upon a gold field in a lonely place - it's all there for the taking. Because the energy situation seems to be something intuitively clear to people of a particular sort, but totally beyond others, even who are otherwise quite bright. It's as if most people have a safety circuit that just tunes their attention out when they encounter something that is too disturbing to the foundation pof their lives.

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