ganesh

Lucid,

Still your arguments hold good... Greed reign over economic fundamentals!!!

For a moment Bernanke might have succeeded in spoking the oil cartel greed, in the medium to long term the oil prices are set to breach new peaks... As dollar continues its downward spiral and fresh skeletons tumble out of Subprime market, probably now one can think of going long on oil futures, May contract will be a safer bet.....

Ganesh

Cheney embarks on middle east trip to address our concern !!!!! It will be interesting to see how he manages his personal interest (Halliburton & Co.!!!!) against rising concern over oil prices....

While building on the forward contract at the current prices, I expect unwinding of futures position by key players (read Cheney & Co.). Under these circumstances it will be a good idea for lesser mortals, playing around the fringe of Commodity Market, to go short on April contract.

Hi Lucid,

While light sweet crude oil turn sour with every passing moment I concede to your argument that insatiable greed of few is causing misery to millions.... Probably I can only wish that prices settle down at a realistic level... However in this milieu the oil analysts provide some interesting insight into the surge in oil prices....

Hedge fund having to sell a particular oil contract so it does not end up receiving a tanker-load of oil...
A trader deciding it would be fun to be the first to trade oil above $100 a barrel...

So its not only the middle east crisis, Chavez grumble, Chinese demand or Korean missiles which is fuelling the prices, any tom, dick and harry can spike the oil prices.....!!!!

Lucid,
Appreciate your plain speak but disagree with your cynicism. You would atleast agree on this count that it is the culture of easy money which the credit market is ( or rather was !!!!) promoting which provide the fodder to quench the greed. With the housing turmoil and overall subprime in a fix, the money will not be easy to come by. Sooner than later greed will give way to need….. Taking a leaf out of your views, when you don’t wanna shell a penny more for gas why rest of us be any different… I would rather ride a Bicycle then drive a Hummer…. When there will be no takers for the bait (Oil) then the Sultans and Comrades of trade themselves will prick the bubble…..

Appreciate all the interesting as well insightful comments on the query. Clarifying some issues raised by my friends;
1. The benchmark price is Nymex, and
2. The target end date for the query is 31st July 2008.

I can very well understand the expression of surprise by some friends on this reportedly bizarre question, but let me reason why I think otherwise. Look at the events which influence the oil prices;
• U.S. crude oil inventories rise by 4.2 mln barrels last week
• Gasoline stockpiles increased 1.1 million barrels, 14-year high of 230.3 million barrels last week.
• In addition U.S. Strategic Petroleum Reserve holds crude oil of about 6.983 million barrels.
• US employment falls, fresh sign of possible recession
• Fed cuts growth forecast as US inflation and jobless level rise

Adjusted for inflation in January 2008 dollars the 1979 $38 peak is the equivalent of paying $104.06 today. 1979 peak was on account of demand exceeding the supply. This price level is absolutely unrealistic in the present context. There is no dearth of supply however the demand for crude oil is shrinking owing to economic reasons. The first quarter results and acknowledgement of recession by US will trigger the predicted fall in crude oil prices. Lets wait and watch.

Appreciate the comment, the end date for the price tab is July 2008.