Amazing everyday china cuts a deal somewhere else in the world!!bec they know the world is running out of oil,thier thirst for oil can not be stopped!!amazing how the world hasnt realized it yet!!long term there is no stopping 4 the price of oil!!now that contango is non existant i bought long term calls
Short term its too difficult to tell but simply on the slow economic recovery, weak demand and high inventory of both crude and refined products oils could easily go to $60 or lower. I agree uncertainty about Iran and other hot spots might keep a floor under oil. For those with lots of cash and can hold long term of course oil will one day hit record high prices again. Oil could be $100 by 2011. If oil does pull back to $60 it would be a great addition or entry point for a major portion of ones allotment in this sector.
China used Diesel to power factories and towns because no alternative power sources had caught up yet 2-10 years ago -- diesel was cheap.
Do you really believe China will just pay higher prices and not seek alternatives? Their thirst for alternatives is what you need to look at -- expensive oil/diesel doesn't make sense even in China!
They did it because they had to -- things are changing and diesel is too expensive even for the chinese.
Say hello to natty gas exports from US to China. World is changing, get on board. The only thing that can slow change down is market dumping of oil from desperate producers -- get the World addicted to cheap energy again. Not going to happen IMO, bridge is burned.
Long term OIL use will be on decline. China is more smarter in adapting and producing or copying in volume!!
Each type of bubble only happens once. You will never see internet, tulip, commidities, credit bubbles again in your lifetime!
There will be dead cat bounces, but will never reach old level again! Next bubble will be in fuel cell tech!
I think it was Verenex oil that China had wanted to buy from a Canadian oil company operating in Lybia and Lybia blocked the sale. I am thinking we are going to see a lot more of this going forward. Further how safe assets are in a foreign country is always an issue. Nationalization of oil assets is always a risk. Some free market countries with oil assets allowed to be acquried and with reasonable trade/tax laws are going to fetch a premium. I am thinking oil sands in Canada are starting to look a lot more attractive given world events. "Cheap oil" in places like Nigeria that cannot be pumped due to terrorism or in Venezuela or Lybia that get nationalized dont look so cheap later on. jmho.
However oil sands are incredibly unpopular with environmentalists and do not jive well with the green movement. Oil sands stocks like BQI have tanked since it was clear Obama would win.
Maybe long term these are a great buy but there is serious risk.
Big buyers with growing demand like China have to buy since they can not count on a pull back. Having lots of cash they can afford to hold onto any oil assets they buy through any weak period, knowing oil is going much higher in time. A secure oil suppply is so essential to them that they must buy even if at a premium, not unlike the US. Ironically this buying by China might put a floor under the price of oil. They stand to benefit in a number of ways: 1. its insurance for a steady secure oil supply for the future, 2. it could go up in value even in the short term due to world political events or a weaker US dollar. 3. I think it is likely countries with oil might make it more difficult for foreign countries to make takeover bids. Looks how pcz was not for sale outside Canada and now Su bought it and has itself become not for sale to foreign buyers. Access is going to become even a more major issue going forward. I notice Lybia had blocked the sale of a Canadian oil company/Lybian asset to China, and we will see more of that world wide. Its not just about price but about access. In a few years more oil assets wont be allowed to be sold for any price. jmho.
Wait until Israel bombs Iranian uranium refinement facilities...which they will inevitably do....and then see what happens to oil...it could be $300 a barrel within two or three days after the bombing