Comments on: IS OIL ABOUT TO ROLL OVER?

By: TPC

TPC — Tue, 12 May 2009 17:33:27 +0000

You can have short covering with increased OI. Just look at the banks in the last month and the increase in short interest in names like Citi.

As I said above, going long nat gas is more of a hedging bet based on valuation when compared to oil.

Great points though. Definitely debatable.

By: No one important

No one important — Tue, 12 May 2009 16:31:32 +0000

A few small problems with this post:

1) If Oil's rally was short covering wouldn't we be seeing OI drop instead of the increasing?

2) Going Long Natgas is tough with us on pace to fill storage in the United States by September. That leaves us the whole month of October to inject gas with no where to put it.

By: TPC

TPC — Mon, 11 May 2009 22:25:54 +0000

It wouldn't so much be a bet that oil AND nat gas fall, but a bet that nat gas is cheap when compared to oil so might be less susceptible to declines. I don't necessarily disagree with anything you said and I have no position in either, but it's something to think about….

By: E

Mon, 11 May 2009 22:05:08 +0000

just a side note, natural gas demand is driven by northeast home heating (winter) and electric power use (AC cooling in summer)….very seasonal…..

especially considering the vast majority of installed generating capacity since 2000 has been combined cycle gas turbines (heat rates of about 7,000 MMBTU/kw-hr)…..now as a result of depressed natural gas prices, eastern coal fired power plants (heat rates of 10,500+ MMBtu/kw-hr) are being displaced…..look at dispatch curves in ERCOT….will PRB coal fired units be next…..doubt it….cause coal prices are falling and natural gas prices are gonna rise….

so yes, going long natural gas at these prices may be a no brainer….but i wouldn't necessarily go short oil…why take both sides of a trade? you might not have the right hedge……

By: E

Mon, 11 May 2009 21:59:38 +0000

Oil will not "roll over"

there is no substitute fuel for autos....

you can't put natural gas (at least in the US) into cars, so you will have a disconnect in the oil to gas price ratio....a long time 6:1 ratio due to heat content (6 million BTU per barrel vs 1 million BTU per 1000 cubic feet)....this ratio has now risen to 14:1....i expect this to be about 12:1 long term....and with natural gas migrating back to the $5-7 MM/BTU level....well....oil will remain high

look how many cars a year china is adding
what about india and the Tata car?

joe blow just cant give up the SUV in america

oil prices to keep the consumer down

are you old enough to remember when every economist in the US said that $50 oil will induce a recession....

we are in for hard times for a long long time

btw, the blog is great keep up the good work, its really good for for thought and making my brain fat