Oil hits $100/barrel

Natorgator · Post by **Natorgator** » 2008-01-02 01:14pm

It's finally happened:

Violence in Nigeria, supply disruption in Mexico and the prospect of another drop in U.S. inventories and more rate cuts drive crude past the triple-digit mark

NEW YORK (CNNMoney.com) -- Oil prices kicked off the first trading day of 2008 by hitting a new high of $100 a barrel Wednesday on violence in oil-rich Nigeria, the prospect of more interest rate cuts, a halt in Mexican imports and the expectation of yet another drop in U.S. crude supplies.

U.S. crude for February delivery jumped $4.02 to $100 a barrel on the New York Mercantile Exchange. The previous trading record was $99.29 set Nov. 20. Oil prices ended 2007 by gaining nearly 60 percent for the year, the largest jump this decade.

"This market is really gonna fly," Ira Eckstein, president of Area International Trading Corp, said from the NYMEX floor.

In Nigeria, bands of armed men invaded Port Harcourt, the center the oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel, The Associated Press reported. Four policemen, three civilians and six attackers were killed. The Niger Delta Vigilante Movement claimed responsibility for the attack.

A surprise fall in manufacturing activity sparked fears of yet another interest rate cut from the Federal Reserve. Interest rate cuts generally cause the dollar to fall - and oil prices rise - as investors bail out of U.S. equities and into commodities.

One trader said all oil exports from Mexico will be halted Friday, but the reason was unclear.

Analysts are expecting the latest government inventory report - set for release Thursday, to show a 1.8 million barrel decline in crude supplies, according to a Dow Jones poll. It would mark the seventh straight week U.S. crude stocks have dropped.

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-01-02 01:20pm

w00t!

Break out the apocalypse party!

Though it's not so much a big deal. Bonny Sweet and other Asian blends have been over $100 for a while now.

Glad I didn't make that bet at PO.com, I'd have been way off.

J · Post by J » 2008-01-02 01:29pm

Never fear, Russia/OPEC/Brazil/Africa/Canada/insert oil producing country will soon open up the taps to rake in a windfall, and oil prices will head down towards a single Yergin.

Also,

Analysts are expecting the latest government inventory report - set for release Thursday, to show a 1.8 million barrel decline in crude supplies, according to a Dow Jones poll. It would mark the seventh straight week U.S. crude stocks have dropped.

My guess is the number will be a lot closer to 5 million. As far as I know, oil imports aren't coming in any faster and will all the holiday driving going on consumption isn't exactly going down either.

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-01-02 01:42pm

Beutel said it wouldn't pass $98 at all and start declining in the near future to the low eighties or even sixties. Now he's saying it will keep on going past $100 like a freight train.

Maybe the traders are spooked now. I await tomorrow's belated EIA report.

And Robert Rapier of TOD only just won his bet. Hilariously, oil breaks the record just a day after the bet ends.

J · Post by J » 2008-01-02 01:50pm

Admiral Valdemar wrote:Maybe the traders are spooked now. I await tomorrow's belated EIA report.

Maybe the traders have finally grown functional brains. But yes, tomorrow's report is likely to be interesting.

And Robert Rapier of TOD only just won his bet. Hilariously, oil breaks the record just a day after the bet ends.

Yup. And I'd say Matthew Simmons is on the way to collecting his $200 by 2010 bet.

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-01-02 02:16pm

It's somewhat disturbing that there's an article behind a paywall on the FT website that discusses PO as if it's some new concept and may lead to issues.

These people are really in for a shock if they cotton on to the fact that what we talk of is truth, the sort of thing they, until recently, laughed at.

Sarevok · Post by **Sarevok** » 2008-01-02 03:25pm

If there was not a ban on hoarding oil I could have made a filthy rich amount of money between the time you guys started scaring us with your peak oil threads and now.

Vaporous · Post by **Vaporous** » 2008-01-02 03:50pm

Well, we've seen this coming for a while now, so no surprise.

The Dow is down 200 points so far.

Stark · Post by **Stark** » 2008-01-02 04:37pm

Sarevok wrote:If there was not a ban on hoarding oil I could have made a filthy rich amount of money between the time you guys started scaring us with your peak oil threads and now.

Or you could have quite legally traded in energy futures?

The Duchess of Zeon · Post by **The Duchess of Zeon** » 2008-01-02 04:42pm

Maybe it'll touch $200 briefly in 2010 but I don't expect it to be over $200 permanently until 2012 or 2013. Likewise it'll probably reach $300 by 2020 but may dip down below a bit before going up permanently by 2025 or so. By 2030, though, permanently over $400, and 2040, permanently over $600. Of course, by that time, the price will matter less, as there will be extensive and vast physical shortages which prevent most people from obtaining oil products to begin with.

And I'm the conservative one.

Flagg · Post by **Flagg** » 2008-01-02 04:54pm

Does this really have to do with oil going up or our dollar going farther into the shitcan? Or am I missing something when making that observation?

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-01-02 05:00pm

The Duchess of Zeon wrote:Maybe it'll touch $200 briefly in 2010 but I don't expect it to be over $200 permanently until 2012 or 2013. Likewise it'll probably reach $300 by 2020 but may dip down below a bit before going up permanently by 2025 or so. By 2030, though, permanently over $400, and 2040, permanently over $600. Of course, by that time, the price will matter less, as there will be extensive and vast physical shortages which prevent most people from obtaining oil products to begin with.

And I'm the conservative one.

Actually, if oil keeps being sucked out of the US reserve at the present rate, they'll be out of crude by 2010. Then price won't matter.

We're not seeing a run on oil yet. $100 took a lot to get to and gold is going up along with other commodities to keep pace. When the real oil rush begins, $200 will look cheap. Oil at $400 in 2040 is a total pipe-dream.

To answer the question regarding the dollar, this is a mixture of both. The dollar has lost some 50% of its value in the last decade, so no, this isn't purely because of the dollar since oil has quadrupled in price in the last 7 years or so. Additionally, the dollar has stabilised a bit lately.

The Duchess of Zeon · Post by **The Duchess of Zeon** » 2008-01-02 05:08pm

Admiral Valdemar wrote:
The Duchess of Zeon wrote:Maybe it'll touch $200 briefly in 2010 but I don't expect it to be over $200 permanently until 2012 or 2013. Likewise it'll probably reach $300 by 2020 but may dip down below a bit before going up permanently by 2025 or so. By 2030, though, permanently over $400, and 2040, permanently over $600. Of course, by that time, the price will matter less, as there will be extensive and vast physical shortages which prevent most people from obtaining oil products to begin with.

And I'm the conservative one.
Actually, if oil keeps being sucked out of the US reserve at the present rate, they'll be out of crude by 2010. Then price won't matter.

We're not seeing a run on oil yet. $100 took a lot to get to and gold is going up along with other commodities to keep pace. When the real oil rush begins, $200 will look cheap. Oil at $400 in 2040 is a total pipe-dream.

To answer the question regarding the dollar, this is a mixture of both. The dollar has lost some 50% of its value in the last decade, so no, this isn't purely because of the dollar since oil has quadrupled in price in the last 7 years or so. Additionally, the dollar has stabilised a bit lately.

I said $600+ in 2040. Not, of course, like anyone will really be able to get any. Oil-derivated products will occasionally show up on the market to be snatched up by the very wealthiest at extremely inflated values, assuming we aren't shooting rich people for hoarding while singing the Internationale yet.

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-01-02 05:19pm

Yeah, I was emphasizing that even that high figure is highly unlikely in that time-frame, and possibly even $600 depending on supply.

I would expect shortages to have hit by then though, and the US to be insolvent (not that it isn't already).

aerius · Post by **aerius** » 2008-01-02 05:19pm

Stark wrote:
Sarevok wrote:If there was not a ban on hoarding oil I could have made a filthy rich amount of money between the time you guys started scaring us with your peak oil threads and now.
Or you could have quite legally traded in energy futures?

Or oil industry stocks. Imperial Oil, Exxon-Mobil, Halliburton, Schlumberger, and many others have gone up massively in the last couple years.

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-01-02 05:34pm

By the way.

This is officially an oil crisis now, one could say.

Guardsman Bass · Post by **Guardsman Bass** » 2008-01-02 05:52pm

The fuck? The last I'd heard of oil price changes in the mainstream media was that they had been heading downward towards the eighties - and now it's back to $100 again?

I'm wondering when we're going to see higher gas prices in my home state from these. We've been sitting at about $3/gallon for at least a month or more now.

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-01-02 06:09pm

It went down to $88, IIRC, then zoomed back up just before New Year's. With no Father Christmas and no calming anecdotes from OPEC, there's nothing to stop the barrier being breached. The news reports don't even mention the price being below the adjusted record for inflation, because we're now at it.

Aaron · Post by **Aaron** » 2008-01-02 07:01pm

Sarevok wrote:If there was not a ban on hoarding oil I could have made a filthy rich amount of money between the time you guys started scaring us with your peak oil threads and now.

There's a ban on hoarding oil? Are you in the middle of a war?

The Duchess of Zeon · Post by **The Duchess of Zeon** » 2008-01-02 07:13pm

Cpl Kendall wrote:
Sarevok wrote:If there was not a ban on hoarding oil I could have made a filthy rich amount of money between the time you guys started scaring us with your peak oil threads and now.
There's a ban on hoarding oil? Are you in the middle of a war?

This crunch is already affecting the third world.

Admiral Valdemar · Post by **Admiral Valdemar** » 2008-01-02 07:14pm

Cpl Kendall wrote:
There's a ban on hoarding oil? Are you in the middle of a war?

I imagine the country not far from his present location that is currently imploding may affect things. Not that this alters the validity of trading oil futures, or any commodity for that matter (gold is breaking records too, but it doesn't put a tiger in your tank).

Aaron · Post by **Aaron** » 2008-01-02 08:28pm

The Duchess of Zeon wrote:
This crunch is already affecting the third world.

Admiral Valdemar wrote: I imagine the country not far from his present location that is currently imploding may affect things. Not that this alters the validity of trading oil futures, or any commodity for that matter (gold is breaking records too, but it doesn't put a tiger in your tank).

To my shame, I didn't clue in that he is in the third world.

Tasoth · Post by **Tasoth** » 2008-01-02 08:50pm

Sorry for taking this off topic, but the question is still related.

What is it that makes individuals who aren't complete loonies think that this is all a hoax? That oil producers/refineries are artificially gouging the price and that there's a whole mess load of oil somewhere? My dad has this view, and every time he makes a statement along those lines, my heart just sinks. He's not crazy and he's not uneducated, but he holds to this idea that there is more oil out there. Is it because while he was growing up, oil looked like it was never going to go away, that there was always going to be more cheap oil just around the corner?

Oni Koneko Damien · Post by **Oni Koneko Damien** » 2008-01-02 09:28pm

Tasoth wrote:<snip>

I think it's just the natural human fear of change. A vast majority of the first world has pretty much had it pounded in from birth that petroleum products are the inexhaustible be-all end-all solution to all their inconveniences. The very idea that oil would run out hits them mentally and emotionally at the same level as the idea that, say, tap-water will run out. It's counter to their entire life experience, so rational or not, they'll find any way possible to handwave it away.

Post by **Mr Bean** » 2008-01-02 09:31pm

Tasoth wrote:
What is it that makes individuals who aren't complete loonies think that this is all a hoax? That oil producers/refineries are artificially gouging the price and that there's a whole mess load of oil somewhere? My dad has this view, and every time he makes a statement along those lines, my heart just sinks. He's not crazy and he's not uneducated, but he holds to this idea that there is more oil out there. Is it because while he was growing up, oil looked like it was never going to go away, that there was always going to be more cheap oil just around the corner?

In this case he's not bothered to engage the logic part of his brain.
That being, unless he believes that there's an oil fairy that puts ten million barrels of oil back into Saudi Arabia's reserves each day, at some point their oil will run out and so will everyone elses.

If he was using logic he will at this point come to the conclusion that baring any magic oil fairy, Oil will at some point run out one day.

With this in mind he can go on and logically think that if oil must run out one day, then what is the point of an Oil scam? If you do it right perhaps you make as much as a trillion dollars, but what then? It's not like you can get away with it multiple times, you can drive the price up only so long and so much before market forces find an alternative to oil and you go out of business because people don't need as much oil anymore.

Thus from a business stand-point, it makes much more sense from an oil company standpoint to insist that oil will indeed last forever, rather than being honest that the tap will run dry in a year or 2012 or 2020 or whenever.

Your father is falling into the classic grand consiparcy theory, that all the oil company's of all the world (Including the one's that hate the US or dislike us like Iran, Venezuela and Russia) have all signed some secret deal to make like oil is going to run out, in order to drive up prices and make everyone richer, cue evil laughter....

Except, how could such a conspiracy come to be in the first place? And if everyone believed oil was running out, would they not do what they are doing right now? As the price goes up, everyone seeks to find the next alternative to oil as they did with Coal before it, and wood before that?

People like conspiracy's, and few people bother to logically think them through once they entertain notions of a conspiracy, how many people must keep quiet, what exactly they would gain and so on.