$2.20 And Lower. Prices Going Down Down Down

**cincygreg** · September 26th, 2006, 11:11 AM

Since you took it upon yourself to edit one of my posts, I am now going on a crusade to make sure the rest of the board reveres you as I do.

You are not like the other mods. You are special.

[ September 26, 2006 01:12 PM: Message edited by: The Big Sexy ]

**cincygreg** · September 26th, 2006, 11:34 AM

This is the ghost of Maureen...I love what reason is doing.

[ September 26, 2006 01:14 PM: Message edited by: The Big Sexy ]

**reason** · October 6th, 2006, 01:31 PM

From Cantor Fitzgerald Report:

"Yes, it's a Goldilocks economy, except the Big Bad Wolf - geopolitical risk - stand in for the now-hibernating bears...Risk markets are disturbingly dependent on the oil price.

To say oil is political is like saying that bears are fuzzy. As we argued Aug 18, the stalemate in the strategic position has a lot to do with the Bush administration's unwillingness to rock the board before the November elections. That leaves some nasty unfinished business for late 2006 or early 2007."

gunslinger...mark my words...oil will jump back up right after the elections...

**Gunslinger** · October 6th, 2006, 06:20 PM

Jesus Chirst on a crutch. I thought we were done with this. Why can't you let this go.

Looking at the trends in prices yes the price will go up. That's like saying water is wet. In fact, over here in NKY prices are already starting to creep up. But it will not go up to what it was over the summer. My guess is it'll peak @ $2.50 or $2.60.

[ October 06, 2006 03:22 PM: Message edited by: Gunslinger ]

[ October 06, 2006 03:23 PM: Message edited by: Gunslinger ]

**Gunslinger** · October 6th, 2006, 06:20 PM

double punch. sorry.

[ October 06, 2006 03:21 PM: Message edited by: Gunslinger ]

**reason** · October 6th, 2006, 06:49 PM

Originally posted by Gunslinger:
Jesus Chirst on a crutch. I thought we were done with this. Why can't you let this go.

Looking at the trends in prices yes the price will go up. That's like saying water is wet. In fact, over here in NKY prices are already starting to creep up. But it will not go up to what it was over the summer. My guess is it'll peak @ $2.50 or $2.60.

[ October 06, 2006 03:22 PM: Message edited by: Gunslinger ]

[ October 06, 2006 03:23 PM: Message edited by: Gunslinger ]

I just quoted an industry expert - you know, someone who doesn't nothing but for a living.

You can tell us that everything is fine in Nigeria, Iraq, Iran, etc, etc, etc, but it's not. Just a postponement of reality, that's all.

My argument stands. Yours holds no water. The prices are still grossly below where they were just a short time ago. Reality will set in shortly after the election.

**Gunslinger** · October 7th, 2006, 02:45 AM

Originally posted by The Big Sexy:
<blockquote>quote:<hr />Originally posted by Gunslinger:
Jesus Chirst on a crutch. I thought we were done with this. Why can't you let this go.

Looking at the trends in prices yes the price will go up. That's like saying water is wet. In fact, over here in NKY prices are already starting to creep up. But it will not go up to what it was over the summer. My guess is it'll peak @ $2.50 or $2.60.

[ October 06, 2006 03:22 PM: Message edited by: Gunslinger ]

[ October 06, 2006 03:23 PM: Message edited by: Gunslinger ]

I just quoted an industry expert - you know, someone who doesn't nothing but for a living.

You can tell us that everything is fine in Nigeria, Iraq, Iran, etc, etc, etc, but it's not. Just a postponement of reality, that's all.

My argument stands. Yours holds no water. The prices are still grossly below where they were just a short time ago. Reality will set in shortly after the election.<hr /></blockquote>I never said that things were fine in Nigeria and Iraq and Iran, I simply quoted the experts I read that said their forecasted predictions for those countries did not come to pass. I you'll go back and read my posts you'll plainly see that I said that.

Quit misquoting me.

Oh, BTW you still have not given us one bit of evidence about your conspricy theory.

**cincygreg** · October 8th, 2006, 11:03 PM

Less than one moth til election day, and it's down to $2.01 right down the street from me.

$1.91 with discount. [img]graemlins/thumbs_up.gif[/img]

**Sean Pa** · October 17th, 2006, 12:07 AM

Why gas prices dropped
Trust us. It wasn't OPEC or Republicans trying to influence midterm elections.
By Nelson D. Schwartz, Fortune senior writer
October 16 2006: 11:35 AM EDT

(Fortune Magazine) -- If the recent plunge in gas prices is the result of a conspiracy by President George W. Bush to help the Republicans retain control of Congress, as 42 percent of Americans believe, according to one Gallup poll, a lot of Wall Streeters wish they'd been in on the plot.

The end of oil's stunning ride
So what really drove prices down - if not an Oliver Stone-worthy scenario involving the Commander-in-Chief, the House of Saud and Secretary of the Treasury Hank Paulson cajoling his cronies at Goldman Sachs to sink the crude market?

Hedge funds get ahead of themselves
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By late summer, hedge funds and other investors had poured billions into long positions in oil, gasoline, natural gas and the rest of what traders call the "energy complex," all betting on a replay of the severe 2005 hurricane season that sent prices soaring in the wake of Katrina and Rita. But one day after oil reached a monthly high of $76.98 a barrel on Aug. 7, government meteorologists downgraded their hurricane forecast and cautioned that a repeat of 2005 was "unlikely."

That announcement, combined with the end of the summer driving season and a recalibration of the Goldman Sachs (Charts) commodity index that reduced the weighting of gasoline, prompted speculators to head for the exits even faster than they'd piled in.

The switch in Goldman's basket of commodities had been previously announced by the firm, but that didn't stop the conspiracy theorists. "Hmm, what a coincidence, luring Goldman's top dog to take a HUGE pay cut by becoming Treasury's top dog, and then Goldman Sachs makes this unexpected decision, serving to dramatically drive down gas prices," said the Grey Matter, a liberal blog. But the grassy-knoll crowd didn't bother to crunch the numbers.

According to Joel Fingerman of Chicago-based OilAnalytics.net, between the peak of $77 a barrel in August and the October low of just under $58, traders dumped nearly 40 million barrels (a 20 percent drop) from their long positions. The volatile gasoline market showed an even sharper decline - with traders cutting long positions from 32 million barrels in midsummer to just 1.7 million in October.

"Whatever you want to call it - speculators, fast money, hot money - a big part of the drop in crude that we've seen this year is because of selling by hedge funds," says Merrill Lynch technical analyst Mary Ann Bartels.

Betting billions on liquefied natural gas
That avalanche of cash also explains what's got the paranoid types talking - not merely the timing of the plunge in prices but its rapid speed. "Speculators create more velocity around existing trends," says Bartels. "Things are happening a lot more quickly in these markets than they used to."

The losers
Some traders were lucky and got out in time; most weren't. Implosions like the collapse of the $9.2 billion Amaranth fund seem spectacular, but the fund was merely caught in a bigger and badder bet than others hoping for another Katrina. Amaranth trader Brian Hunter bet the farm that hurricanes and a cold winter would push up natural gas prices, but, says Bartels, "a lot of people were caught by surprise."

The average energy hedge fund dropped 4 percent last month, according to Joel Schwab, a managing director of Hedgefund.net, which tracks fund performance. "They were having a great year, then things fell apart in September when they were caught long," says Schwab.

Even broader index-type funds that invest in a wide range of commodities and are open to individual investors are down. Manager John Brynjolfsson's Pimco Commodity Real Return fund is now off 5.6 percent for the year, after being up 1.4 percent before the summer rout.

The winners
One trader who's been luckier is Julian Barrowcliffe, manager of the $500 million Anglian Commodities fund. He has managed to eke out an 8 percent gain for the year by avoiding bets on which way crude would go, instead playing off the spreads between different products, betting on how, say, heating oil would move if gasoline prices went down.

"Anytime you have a big reversal, the guys who follow the trends get killed trying to get out quickly," says Barrowcliffe. As for those conspiracy theories, Barrowcliffe insists he wasn't tipped off. "It's ludicrous," he says. "Maybe 42 percent of Americans think Elvis is alive too."

Ironically, the current price for crude - $59 a barrel - is roughly where oil insiders have been predicting it would be if it weren't for all that hot money flowing into commodities. Last spring, energy consultant and Deloitte advisor Joe Stanislaw told Fortune that fundamental supply and demand factors suggested a price of about $50 a barrel, with geopolitical factors adding $10 and speculators putting another $10 on top of that.

Unfortunately for drivers, Stanislaw doesn't expect the premium caused by worries about tensions in key oil-producing countries like Iran, Iraq, Venezuela and Nigeria to fade anywhere near as quickly as all that hot money did. And there's no reason that money won't move back into energy if sentiment turns and there's a new trend to play.

Right now, the latest bet by traders is for a normal winter - if there's a sudden cold snap before Thanksgiving, expect a bump in crude. So enjoy the low gas prices while they last. You can be sure the White House will, even if it didn't orchestrate them.

source

**jumper69** · October 17th, 2006, 06:55 PM

I said it way before this thread existed and before Greg sorta came out [img]graemlins/rainbow.gif[/img] that hedge funds were behind the meteoric rise in gas prices. If you want to shoot someone, find the oil speculators and shoot them. Honestly...it's their fault.

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