I dunno, maybe he's a Star Wars fan too.
Dallas Business Journal: Pickens: 'Fundamentals' driving oil price.
Quotes:
Dallas oilman T. Boone Pickens says "fundamentals" are the reason the spot-market price of oil has fallen recently to $61 per barrel from nearly $79.
....
"What's happened is you have enough oil now to satisfy everyone's needs," he said. "The demand is dropping off; the economy is slowing down. You don't need as much oil as you needed 30 days ago or 60 days ago, so the price came down. And that's it in a nutshell."
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All kidding aside, the 50/50 case for recession is tilting here heavily. In the recession of 2001, oil prices dropped from roughly $40 (inflation adjusted) to around $23, or 42%. In 1990, they dropped from roughly $56 to around $33, or 41%.
So, let's see... $78 - (78 * .41) = $46.
OPEC wanted a floor of $60, they're going to have to pull oil off the market to get that one to stick. That will be interesting to watch.
Saturday, September 23, 2006
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3 comments:
Personally I have never believed these things about "terror premiums" and hedge fund speculations. There really isn't enough storage capasity for hedge funds to speculate price up for years. And I don't understand how one could speculate price up with futures only as eventually you have to take the delivery.
By the way, what is you opinion, with what kind of future commodity prices commodity stocks (BHP, oils ect) have been priced currently?
I thought TBP said he would not be surprised if oil went to $100 by year end, he does not sound surprised by $60 even though his hedge fund investors might be surprised-does anything surprise him?
Boone Pickens said oil would probably go to $100 "unless you go into a global recession". See archives from August or July.
Opinions were mixed on the first question, but generally consensus said oil stocks were pricing in $45-$50 oil, not the $60+ oil we have. Generally they do not get full credit.
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