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Petróleo Brasileiro S.A. - Petrobra Message Board

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  • arwen_imaginary arwen_imaginary Sep 3, 2010 3:56 PM Flag

    Doc, Oil analyst calls for Oil at 10 bucks per barrel

    I do not know if powerfull people want oil in the 70-80's range, but both of my banks have told me this more than a year ago...
    by the way they said we will reach $100 before ever seing 50 again... I beleived some of your arguments, but...

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    • < both of my banks have told me this more than a year ago...
      by the way they said we will reach $100 before ever seing 50 again.>

      I am not sure which banks you use, but Goldman Sachs and Morgan Stanley are heavy into the oil markets, and what they, or at least Goldman, has shown is that they are willing to screw their customers for a personal advantage. Goldman admitted this in Congress, so I would take at least what some of the banks say with a grain of salt. Both Goldman and Morgan were calling for huge moves higher in oil up right before it crashed in 2008.

      On top of that, oil was over $100 for only six months and then promptly crashed after that. Once oil hit $100 a barrel, demand dropped. The $70 to $80 range seems to be the highest price the oil majors can get without demand dropping off and without huge hits to world GDP.

      This is what Dennis Gartman said about oil a few months ago, "He says estimates that oil may be going to $101 are laughable.

      The market is in a huge contango and there’s more than enough crude above ground. It's moving into storage. It's moving into tankers, Gartman tells the desk.

      Deferred futures are going up but that's an arbitrage game and has nothing to do with price action, he adds."

      In a later interview, Gartman said he was agnostic about oil prices.

      PG called Beutel, an oil analyst, an idiot. Well, based on the headlines, I could see why, but if you watch the video here, http://www.cnbc.com/id/38470762/Time_to_Head_for_Exits_on_Oil_Trade_Gartman, I found little to disagree with.

      Beutel outlined the levels of support for oil, and said that oil should go lower but that in all likelihood it wouldn't for the time being.

      When oil made the move down from $147 to $34, during that whole trading range, there was between one and three mbpd spare capacity. With the rebound from oil from $34 to $75, spare capacity has gone up from three mbpd to five mbpd.

      So demand has gone up, but supply has gone up much faster.

      People who point to China/India as a reason for oil going higher never use the numbers. Indian demand is literally a rounding error with regards to world consumption. China is more real. China is only importing around 5 mbpd of oil.

 
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