Oil will hit 60s again

First of all a disclaimer, I'm not a professional advisor, or CPL, also you could lose more than your whole account in trading futures. What I'm suggesting here are just ideas.

From reading most TV talking heads all predicting oil will hit 80s and 85s. Most traders also see 80s coming very soon.The opinions we hear are many, from Iran, OPEC, summer usage, Permian Basin supply bottlenecks, and countless others, all make sense after the fact, after the fact that oil went from low sixties to high 70s in weeks. But where where all these experts when crude was in the low 60s, when everyone was saying then we could head to the 50s. So to now say, it will go up another $5, does not require any genius.

However, as with most markets, the unseen is seen only by a few, unless you have mastered the charts. Next time you predict that oil is going to 80s please let us know when oil is in the low 60s, not when its almost at 80. So yes all opinions are great, but in what time frame, will we hit $80? In August, but will we first hit $70?. Any $1 move in oil, in the futures markets for many of the producers translates into ?? of dollars, especially a $10 move. So it's important to try and see the moves within their time perspectives.

So let me just put this in perspective, as of this post, WTI is trading at http://markets.businessinsider.com/commodities/oil-price?type=wti, so just above $74, it has already traded above $75 this week. So the importance here is the following, is Oil going to continue, straight up or first make a detour. Looking at charts we can clearly see that Oil will try to make one more push, there are too many speculators now, and many new ones who will come in the market, and more news will come to scare the speculators to move up the prices, from what I see, it will be $79.xx. However before we see $79, we could see weak speculators get out of long positions due to a small drop in crude prices, after that small push down, Crude may hit $79.

After that we will have a major push down, now this could be because of Trumps success in pushing prices down with the Saudis with 2 mbpd output, or it could be because of China's efforts to revitalize certain current low producing countries with billions dollars of investments or deals could be made outside OPEC, and many will come up with many more reasons. Now the push down will be probably be to the sixties, or if there is enough of a push globally even further.

However, from the charts it looks like these great powers won't be able to overcome future political events still about to play out, and eventually we could see prices above $100, this might come about sometime next year. The only thing that will work for sure to keep prices down, and the economy in great health, is to release enough of the Strategic Petroleum Reserves, to keep the US Economy growing. However, if President Trump decides to do this after prices start spiraling up, it maybe too late for the damage that will be caused.

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First, I want to provide my own disclaimer: my reply is purely a guess based on "what is the most logical answer."  I also want to point out that my answer assumes the USA actually has highly intelligent people running the show.  So, lets assume that the USA really does have very smart people in charge, and like any good set of Machiavellian geniuses would do, those very smart people have managed to convince the whole world that the Americans are a bunch of idiots who have recently got together to elect the biggest idiot of them all to run the place.  That way, of course, no one really thinks the USA is a real threat....a wild card, maybe, but not a real threat.  As a result, this causes everyone else to lower their guard, which in turn, allows the geniuses who are actually running the show to set the world up for the ko punch.

And here is the punch:

The USA needs to win a trade war against China.  Now, the Chinese, being very clever, have somehow managed to trick the EU and Canada into joining their side in this war, even though China has been stealing from both the EU and Canada for decades.  Now, the USA has never been one to back down from a fight, not even when their allies abandon them.  So, a fight it is.  Normally, taking on 7 billion people would be a difficult task for any one, but now that the EU and Canada have both been deceived by the Chinese, it is actually a fight against 7 billion plus a lot more.  However, thanks to the newly booming oil industry in the USA, both the EU and China now import much more oil than the USA.  This means that for every dollar that oil increases, it makes it that much easier for the USA to put economic pressure on both China and the EU during the upcoming trade war.  So because of this, the USA actually wants oil prices to continue rising until both China and the EU are forced into recession.  Only then will the geniuses who run the show behind the scenes in the USA finally allow the price of oil to stabilize.  Yes, high oil prices will harm the US economy, but it won't drive the Americans into a recession since even though some parts of the USA will suffer from higher oil prices, other parts, like shale, pipelines and refiners, will prosper, thereby minimizing the damage to American GDP while maximizing that damage to China and the EU.  Even Canada might suffer from the higher oil prices now that their incompetent oil policies have forced most of their oil companies into working on American soil, and this will be even more true with the upcoming sulfur caps about to be imposed on heavy crude.    

Therefore, don't expect oil prices to drop any time soon.  This is because the American geniuses are (and have been) manipulating oil prices ever higher.  When the trade war ends, then we will see oil to fall to $60...and probably even lower, but not before then.  Oil prices will increase to $85, and if that doesn't send China into free fall, then $95, then $105, and it will keep rising until China finally backs down and learns to play fair.

So, is it true that the Americans are manipulating the prices higher to win a trade war?  To answer that question we need to first answer this question: do the Americans actually have geniuses behind the scenes running everything? 

Normally I would want to answer that question in the negative, however, since this trade war happened immediately on the heels of the tax cuts, I find myself wanting to think that this trade war was actually their end game all along, but they first needed the tax cuts to delay an American recession during the trade war (because American voters are fickle a recession would botch the whole thing!).  And if that is the case, and those geniuses managed to arrange for the tax cuts without alerting congress to the end game, which was the trade war all along.  And if that is true, then, well, that certainly would be genius.  On top of this, the USA currently has a FED that is raising interest rates at an absurdly fast rate despite the looming trade war.  However, if the trade war was the end game all along, then raising those rates would be exactly what is needed to ensure that the China (and those backstabbing allies the EU and Canada) feel the burn even faster.  This is even more so with the ECB promising to keep rates steady until late 2019. 

The strange thing is that all of these things are exactly what you would expect to see if geniuses actually are running things in the USA.  So, all of these things, taken together, makes it seem like they had all been planned long ago.  There are just too many moving pieces, all working in apparent perfect cohesion, to suggest coincidence.  But if not coincidence, then what?  

...and we are left with the only logical answer: Americans actually do have geniuses behind the scenes running everything.

Thus, my very tentative conclusion based on practically no substantiated facts other than "what is the most logical answer"... and that answer is this: 

USA has already won the trade war. 

...it was won before it began.  

 

 

 

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6 hours ago, Epic said:

First, I want to provide my own disclaimer: my reply is purely a guess based on "what is the most logical answer."  I also want to point out that my answer assumes the USA actually has highly intelligent people running the show.  So, lets assume that the USA really does have very smart people in charge, and like any good set of Machiavellian geniuses would do, those very smart people have managed to convince the whole world that the Americans are a bunch of idiots who have recently got together to elect the biggest idiot of them all to run the place.  That way, of course, no one really thinks the USA is a real threat....a wild card, maybe, but not a real threat.  As a result, this causes everyone else to lower their guard, which in turn, allows the geniuses who are actually running the show to set the world up for the ko punch.

And here is the punch:

The USA needs to win a trade war against China.  Now, the Chinese, being very clever, have somehow managed to trick the EU and Canada into joining their side in this war, even though China has been stealing from both the EU and Canada for decades.  Now, the USA has never been one to back down from a fight, not even when their allies abandon them.  So, a fight it is.  Normally, taking on 7 billion people would be a difficult task for any one, but now that the EU and Canada have both been deceived by the Chinese, it is actually a fight against 7 billion plus a lot more.  However, thanks to the newly booming oil industry in the USA, both the EU and China now import much more oil than the USA.  This means that for every dollar that oil increases, it makes it that much easier for the USA to put economic pressure on both China and the EU during the upcoming trade war.  So because of this, the USA actually wants oil prices to continue rising until both China and the EU are forced into recession.  Only then will the geniuses who run the show behind the scenes in the USA finally allow the price of oil to stabilize.  Yes, high oil prices will harm the US economy, but it won't drive the Americans into a recession since even though some parts of the USA will suffer from higher oil prices, other parts, like shale, pipelines and refiners, will prosper, thereby minimizing the damage to American GDP while maximizing that damage to China and the EU.  Even Canada might suffer from the higher oil prices now that their incompetent oil policies have forced most of their oil companies into working on American soil, and this will be even more true with the upcoming sulfur caps about to be imposed on heavy crude.    

Therefore, don't expect oil prices to drop any time soon.  This is because the American geniuses are (and have been) manipulating oil prices ever higher.  When the trade war ends, then we will see oil to fall to $60...and probably even lower, but not before then.  Oil prices will increase to $85, and if that doesn't send China into free fall, then $95, then $105, and it will keep rising until China finally backs down and learns to play fair.

So, is it true that the Americans are manipulating the prices higher to win a trade war?  To answer that question we need to first answer this question: do the Americans actually have geniuses behind the scenes running everything? 

Normally I would want to answer that question in the negative, however, since this trade war happened immediately on the heels of the tax cuts, I find myself wanting to think that this trade war was actually their end game all along, but they first needed the tax cuts to delay an American recession during the trade war (because American voters are fickle a recession would botch the whole thing!).  And if that is the case, and those geniuses managed to arrange for the tax cuts without alerting congress to the end game, which was the trade war all along.  And if that is true, then, well, that certainly would be genius.  On top of this, the USA currently has a FED that is raising interest rates at an absurdly fast rate despite the looming trade war.  However, if the trade war was the end game all along, then raising those rates would be exactly what is needed to ensure that the China (and those backstabbing allies the EU and Canada) feel the burn even faster.  This is even more so with the ECB promising to keep rates steady until late 2019. 

The strange thing is that all of these things are exactly what you would expect to see if geniuses actually are running things in the USA.  So, all of these things, taken together, makes it seem like they had all been planned long ago.  There are just too many moving pieces, all working in apparent perfect cohesion, to suggest coincidence.  But if not coincidence, then what?  

...and we are left with the only logical answer: Americans actually do have geniuses behind the scenes running everything.

Thus, my very tentative conclusion based on practically no substantiated facts other than "what is the most logical answer"... and that answer is this: 

USA has already won the trade war. 

...it was won before it began.  

 

 

 

Hello,

I firmly believe that first rule is to never undermine your opponent in any strategic play. If US has geniuses you can bet China has them too, India has them too and so does any other country.

Only time will tell what's going to happen as there are still too many unknowns. What we do know is the world has been in a surplus of oil for 3 years and oil inventories have actually been up 80M barrels since August 2014. I have the spreadsheet and the data is from https://www.investing.com/economic-calendar/eia-crude-oil-inventories-75

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2 hours ago, henil said:

Hello,

I firmly believe that first rule is to never undermine your opponent in any strategic play. If US has geniuses you can bet China has them too, India has them too and so does any other country.

Only time will tell what's going to happen as there are still too many unknowns. What we do know is the world has been in a surplus of oil for 3 years and oil inventories have actually been up 80M barrels since August 2014. I have the spreadsheet and the data is from https://www.investing.com/economic-calendar/eia-crude-oil-inventories-75

But the US as a stable genius in charge so can we assume "if" the trade war is won then everyone else's geniuses are unstable 

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6 hours ago, henil said:

I firmly believe that first rule is to never undermine your opponent in any strategic play. If US has geniuses you can bet China has them too, India has them too and so does any other country.

Only time will tell what's going to happen as there are still too many unknowns. What we do know is the world has been in a surplus of oil for 3 years and oil inventories have actually been up 80M barrels since August 2014.

First, I think you meant to use the word "underestimate", since any good Machiavellian is obligated to undermine their opponents in every strategic play.  But that is besides the point.  Also, I wasn't trying to suggest that the US does in fact have geniuses manipulating things, nor was I trying to suggest that other nations are lacking such geniuses, nor was I trying to turn this into a discussion about tariffs.  What I was trying to do was offer a reasoned answer for the op's question concerning the future movement of oil prices.  

Henil, I believe you are correct in what you said concerning increased oil inventories.   Furthermore, when this is coupled with rising oil production, the price of oil should be falling.  In fact, I had assumed the price should have already fallen, at least down to $65, if not lower.  Yet it hasn't.  And so, I am now looking for alternative answers as to why the price of oil is still so high, and the only thing I could come up with is manipulation by the big players.  And that, of course was my answer to the op's question: if the big players are in fact manipulating oil prices for the sake of the trade war, then $100+ a barrel is certainly on the table.  However, I could very well be wrong.  Maybe there is no manipulation and I am simply missing some vital facts (which is very likely).  I do know that the Permian bottlenecks are likely influencing the price, and so is Venezuela and Libya and the Iran sanctions and Saudi Arabia's overcompensate with OPEC, but my statements are meant to question whether these events are random coincidences, in which case they should be resolved sooner or later and oil prices should fall to a more reasonable level, or whether they are not coincidences at all, in which case they will either not be resolved or other "coincidences" like them will continue to happen, and we should expect to see high oil prices well into the future.

Top Oil Trader also suggested in his original post the lower oil prices are in the US's best economic interest.  In the long term, he is right.  However, I was trying to play devil's advocate by suggesting an alternative theory: in the short term, high oil prices might be in the US's best interests.  

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On 7/5/2018 at 7:56 AM, Top Oil Trader said:

Next time you predict that oil is going to 80s please let us know when oil is in the low 60s, not when its almost at 80. 

I don't often make oil price predictions.  Note that my comment which I have often repeated about hoping for $65 oil this year is just that - a hope. 

On the fairly rare occasion that I do make a prediction about oil prices, it tends to have qualifiers.

June 8 2018:

"Heh heh, Patrick, I am very much the wrong person to ask about this.  I've been hoping for an average of $65 this year.  But I'm in the minority. 

Seems that oil prices are most likely heading toward $70 - $80 by end of this year; that seems to be a growing consensus anyway, near as I can tell."

 

17 May 2018 on LinkedIn:

https://www.linkedin.com/feed/update/urn:li:activity:6402839546748334080

" < *sigh* >     If oil prices hit triple digits this year, betcha oil prices will crash to below $40 in 2019.  

The higher the spike, the worse the backlash crash.  
Does 2014 and 2015 ring a bell with anyone?  Bueller? ... Bueller? ... Bueller?

Just waiting for some smart wag to spout off "but this time it's DIFFERENT !!!"

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(edited)

On 7/5/2018 at 3:04 AM, Epic said:

First, I want to provide my own disclaimer: my reply is purely a guess based on "what is the most logical answer."  I also want to point out that my answer assumes the USA actually has highly intelligent people running the show.  

The "highly intelligent people" running the trade war boils down to two people, of which one is smart enough, but not quite as smart as he thinks he is.  And that person is Wilbur Ross, the leveraged buy-out and bankruptcy Sec. 363 whole-assets buy-out king, now age around 79.  The other person is The Donald, who is crafty and cagey, and (obviously) had great domestic political instincts, but is not smart at all in the sense of being cerebral.  So Epic's analysis has to focus on these two players. 

Let's look at this fellow Ross.  First, he comes from the West Bank of the Hudson River, in New Jersey.  His Dad was a Yalie, so he was a Yalie.  Now understand that Yale has this informal policy of admitting what are known as "legacy Yalies," if your grand-dad went to Yale, and your Dad went to Yale, then you went to Yale, and you did not need much brains for admittance.  That was back in the fifties and sixties until there was this turnover in the college's president's office and the concept of "meritocracy" crept in.  At that point Yale changed, the meritocracy was in direct conflict with the Legacy concept, and the strict quota on Jews started to fall away  (at that time no more than 5% of the incoming class could be Jewish).    Now these Yalies in large part went into Medicine, and Law, and Finance.  The guys that went into Finance were all the "C" students: not very bright, easy to get along with, typically fraternity brothers and good drinking guys, and ended up in daddy's Wall Street firm.   (The "A"'s and "B"'s went into medicine and law, respectively).  A handful went into science and business, including me. 

So you have this fellow who does have some smarts and he shows up on Wall Street, and starts working at one of the very few outfits that also has Jews on board.  To understand the dynamics of New York, remember that the city, although very polyglot, is strictly enforced into Jewish and non-Jewish segments.  Even today the real-estate people know which co-op buildings have Boards of Directors that have a strict "no-Jews" policy, and don't even bother to introduce a Jewish client.  So the Jews did set up their own institution, Salomon Bros., and you had that Rothschild legacy institution.  Now the Jewish approach to finance was to "create paper" and then "sell paper" and pick up a few coins in the deals, or what is known on the Street as "the trail of the golden bread crumbs."  If you eat enough bread crumbs you get fat  (equals rich). 

So Wilbur Ross ends up working at some outfit that has Jews on board, and since those guys had limited employment opportunities on the Street  (the "C" students from Yale and Princeton kept them out from the other firms) they swore that they would get rich and never again be subject to these barriers - and so the Jewish guys worked mighty hard at the Bread Crumbs approach.  And Ross was in there learning how to do it. Eventually he leaves, takes some guys with him, and starts up his own outfit, W.L. Ross Co,., and specializes in buying out companies sitting in the bankruptcy courts, then expelling existing management, installing his guys, generating value, and selling the company for a very fat profit.  And this is the mindset of the guy who whispers into Donald's ear on anything having to do with the economy. 

And what is Ross's thinking on trade and tariffs?  We don't know, because Ross is famously silent. But we do know that Donald has developed this idea that trade wars are "easy to win," so if that preconceived idea gets encouraged, then it is Reality-TV Time and the Donald goes nuts with his twitter feed.  So you have to assume that this is the dynamic - the impulsive and irrational Donald, and the crafty and silent Ross doing the whispering.  So you have to anticipate that Ross thinks that trade wars are a good idea.

And why is that?  Because trade wars introduce instability, and instability is what made Ross fabulously rich.  Ross translates that experience into the international scene, thinking (I speculate) that if he can introduce this uncertainty and instability, then he and his crowd can pick off advantages.  Is he right?  I dunno; neither do you.  But Ross, who is not as smart as he thinks he is, does think so.  And therein lies the danger.

So:  Is the USA really run by really smart people?  Nope.  It is run by a special segment of the business society, the guys that buy and sell paper and distressed assets  (remember, Donald also did that with his casino purchases, which ended up as distressed assets). These are not people who give a damn about what the Germans or the French or even the Canadians think about them.  You cannot seriously think that the Donald gives a damn about what Chrystia Freeland [Foreign Affairs Minister of Canada} thinks, or about what Justin Trudeau thinks, Trump is so famously thin-skinned and humorless that he will barge out of the G-7 and blast away on the twitter feed insulting and denigrating the Premier of Canada, for goodness sake, just how boorish can you get?  So Donald is crafty and a moron, and Ross is crafty and a Wall Street guy with an inflated idea of himself - and the Americans have turned that dysfunctional pair loose on the world. 

Where does this head?  In one word:  chaos. 

Edited by Jan van Eck
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(edited)

And there are those who predict much higher prices (see weblink), but I doubt it will happen much like I doubt oil will retreat back to $60 in the next few months. My prediction (guess) is and has been for $80 oil by the end of 2018 and even in 2019. Yes, oil will return to $60 again someday but not today. 

I work in the oil business and I use to do Futures day trading. What I see today is oil found a floor at $72 per barrel so oil probably won't retreat below $72 unless something dramatic happens in the world of oil to change that. 

http://fortune.com/2018/07/06/crude-oil-price-increase/

https://www.fxstreet.com/news/crude-oil-wti-black-gold-pushes-back-above-7300-a-barrel-201807061513

 

 

Edited by Claude
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7 hours ago, Jan van Eck said:

So Epic's analysis has to focus on these two players.

I do appreciate the background you gave on Ross.  I wasn't privy to a lot of that info.  I wanted to clarify that when I was talking about "highly intelligent people" and "geniuses", you can rest assured that I had not intended to include "The Donald" in that group.  I was more trying to imply that an in-house think-tank had developed the ideas, or even that group of private business leaders outside the scope of the White House had developed them and then influenced the President directly via a representative or some type of lobbyist.  I would imagine that such a group, if it existed, would possess both the wherewithall to avoid the public limelight while also the subtle cunning to convince The Donald that "this is all Donald's idea."  As a result, these "geniuses" (if they exist) are likely to be unknown to any of us (and certainly to me), and so any attempt by us to analyze their genius (or lack thereof) would amount to little more than folly.  What we can do, however, is to surmise their existence or non-existence by looking at the results of this trade war (and oil price movements) after-the-fact.  We can conclude, then, that if the world soon devolves into chaos, then it is highly likely that Donald really is running the show, for better or worse.  But if the opposite happens, that is, if America ends up on top despite The Donald's best attempts to spawn chaos, well, then we should probably assume that there really are geniuses running America (I am here using the term "running" quite loosely), and these geniuses have very little to do with who is or who is not elected.  Knowing that these geniuses likely exist or not, will then help us make more informed predictions about oil price movements as we move forward.  

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1 hour ago, Epic said:

  Knowing that these geniuses likely exist or not, will then help us make more informed predictions about oil price movements as we move forward.  

Well, I can assure you that they do not exist. 

Historically, in each Administration, there were a group of your "wise men," and they were called the Council of Economic Advisors.  The Donald also started out with a Council, composed of intelligent business leaders and some economists.  They all quit. 

I don't think one of the original Council members is still on board. So: where does The Donald get his advice?  And this may surprise you: it is coming from his family members, including Jared Kushner, and daughter Ivanka, and son Donald Jr. and for all I know even his wife. I don't get the impression that wife Melania has any input, not at this point.  She apparently no longer sleeps with Donald and has moved into a separate bedroom in the White House.  

So there you have it.  The principal advisors are people who have no idea what they are doing.  Chaos, anyone?

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I find these comments fascinating, as, to me, trump is a complete moron, a con man hiding something big, and, yet, we see this continual evolution of a shake-up (shake-down?) strategy. Now, since I think he is a moron, that means I think he can't possibly be anything more than a puppet here. And it tells me that "powers that be" are creating all of these strategies, because trump has never had an original thought. So, it boils down to some so-called geniuses really are calling the shots to create a major shake-up/shake-down.

The most baffling thing of my lifetime is the trump-love-cult that has emerged encompassing just about everybody I know. White (and especially evangelical) America adores this guy. They think he's some sort of devout genius. Hahahahaha! Good one, America!

Have you seen the quote from trump's speech a few days ago at one of his many political rallies, his favorite pasttime? Here tis... trump has no organ

I propose to you that that guy, who has no organ, is not generating policy strategies. He is, simply, a con man moron who is hiding something big. Watch out, America! (And the world.)

Now, with this buffoon at the top, where are oil prices going? I don't know, but I'm betting we're not there yet. Sure I hope I time my investment decisions right. I'm gambling on one more major price rise. This $74 WTI is significant but I don't think we're there yet. One thing I have noted over a multi-decade career is that oil booms don't last nearly as long as oil busts. And for the first time in my career, I must also add the possibility that the next bust could be permanent.

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