Oil Prices - How high could it go?

[450SEL6.9]

Crude oil prices are at about $77/bbl. now. It was in the 60s not too long ago. How high will it go?

Some market analysts predict $150, but I think they're usually just glorified pumpers working for some brokerage firm. I think oil will take out 80 next week and probably get to 100/bbl.

Oil prices are controlled by traders and speculators now, hedge funds mostly. With the crisis in the Middle East, prices are a free-for-all not, but even before the crisis, I don't think oil should have been in the $60s/bbl. There is enough oil supply to meet demand worldwide so it's not a shortage, but spot prices of oil stayed high.

The hedge fund industry is so huge now. It accounts for 30-50% of daily trading in major international stock markets. One hedge fund nearly put the global financial markets at risk with their borrowings and collapse in the late-1990s. Hedge funds were allowed to get too big in my opinion though investment banks were also.

 

[Imhotep Evil]

I think in short/medium term it will cost between 60 to 80, maybe even 85 USD.

 

[Centurion]

The price has been increasing throughout the year and it is getting out of control. I feel like buying a prius or VW lupo.

 

[EnI]

Depends.

If ongoing Israeli Hammas-extermination action escalates in a regional war in Middle East then it is possible we will see oil price going up even to $150/barrel.
If not $90 is a limit.

 

[SDNR]

This is a very interesting topic Ray ..but a subject I find very difficult to understand ....I still find the way oil companies set their prices to be one of life's great mysteries.

As for how high oil prices will go .......I have no idea, but I think public transport is going to see a dramatic increase in it's usage.

 

[450SEL6.9]

The price has been increasing throughout the year and it is getting out of control. I feel like buying a prius or VW lupo.

Just don't run out and buy a hybrid. Even if you earn no interest on your money, you'd need to drive it for 15 years to save enough on gas to justify paying several thousand more for a hybrid.

Rob, I think there is a growing group of people who think oil companies don't set prices any longer. Prices for crude are set overwhelmingly by oil traders today. The price of oil futures seems to have lost touch with fundamentals, the main fundamental being that there is no shortage of oil. Demand for oil has increased, but so has supply so no shortage. Oil should not have been in the $60/bbl range, but it was!

Personally, I think at $77 oil, there is $25-30 worth of speculation premium within that. People attack oil companies' profits, but they are producing enough oil and delivering it to market. On the other hand, oil critics give speculators a free pass because they don't know better. There is enough oil and gold for that matter, but unregulated and excessive speculations keep driving the prices up.

I'm getting killed in the stock market. My riskier investment have been shot. Can't seem to buy a break these past few weeks.. Oh well, can't win them all.

 

[notic]

I have little to add to what has already been said, but if you take a look at oil prices, they have almost gone up in a straight line since Bush announced that whole "mission accomplished" speech. As long as there is turmoil in the middle east, speculators will keep driving up prices, and the rest of the world will suffer (especially emerging markets).

...one more thing. another reason that oil will stay high is because this whole ethanol from corn stuff is bs. the american economy cannot grow themselves out of an oil boom, there isn't enough arable land in the USA and the extraction process is not exactly efficient either. that, plus the tarriffs that are placed on ethanol imports to keep american farmers happy will do little to nothing in terms of reducing the price of oil. in the short run, i see oil going above 80-85. but it is just too volitile to make accurate predictions, there are so many variables. one of the major ones being the stability of the middle east and another being kim jong il going ballistic.

 

[450SEL6.9]

...one more thing. another reason that oil will stay high is because this whole ethanol from corn stuff is bs. the american economy cannot grow themselves out of an oil boom, there isn't enough arable land in the USA and the extraction process is not exactly efficient either. that, plus the tarriffs that are placed on ethanol imports to keep american farmers happy will do little to nothing in terms of reducing the price of oil. in the short run, i see oil going above 80-85. but it is just too volitile to make accurate predictions, there are so many variables. one of the major ones being the stability of the middle east and another being kim jong il going ballistic.

Thanks, notic. I agree with what you said about the ethanol from corn stuff. I understand it's hard to predict oil prices, but most oil traders agree that there is plenty of oil. The oil companies expect lower prices, but they aren't seeing lower crude prices. I think it's the speculators driving these commodities to the moon. However, I do believe it is illegal under anti-trust and anti-competition laws to engage in 'excess speculation.' But who the hell is listening?

What is concerning is that what goes up must come down. The supply/demand demographics do not support $76 oil. If China cools and the US goes into recession, how can these prices sustain? Would we see another (overdue) hedge fund blowup?

 

[450SEL6.9]

...one more thing. another reason that oil will stay high is because this whole ethanol from corn stuff is bs. the american economy cannot grow themselves out of an oil boom, there isn't enough arable land in the USA and the extraction process is not exactly efficient either. that, plus the tarriffs that are placed on ethanol imports to keep american farmers happy will do little to nothing in terms of reducing the price of oil. in the short run, i see oil going above 80-85. but it is just too volitile to make accurate predictions, there are so many variables. one of the major ones being the stability of the middle east and another being kim jong il going ballistic.

Thanks, notic. I agree with what you said about the ethanol from corn stuff. I understand it's hard to predict oil prices, but most oil traders agree that there is plenty of oil. The oil companies expect lower prices, but they aren't seeing lower crude prices. I think it's the speculators driving these commodities to the moon. However, I do believe it is illegal under anti-trust and anti-competition laws to engage in 'excess speculation.' But who the hell is listening?

What is concerning is that what goes up must come down. The supply/demand demographics do not support $76 oil. Heck, I don't think it supports $50 oil. If China cools and the US goes into recession, how can these prices sustain? Would we see another (overdue) hedge fund blowup? When are investors going to realize that hedge funds don't automatically outperform? I find so many "rich investors" incredibly stupid.

 

[Michael]

I highly doubt that oil will get up to the 150/bal price range.

However, measuring oil prices have never been easy. I like Roberto, don't quite understand how oil companies come about setting prices. One thing I do know is that even if the Israeli conflict in the Middle East persists, it won't mean that oil will go back down. There are many factors that are influecning the price of oil and one of them is China like mentioned above.