I was in a hurry when I posted this and did not get a chance to comment on it. This is a much more interesting story than I first realized. I will post a stand-alone posting on this one.Oil price futures up another dollar before the market open, Friday, October 1, 2010, and nary a word what's pushing this. Everyone says it's tied to the weak dollar. To some extent, yes, but I think something else is going on. I'm thinking of the "S" shaped curve. The baseline of the curve is tied to strength of the dollar. The early part of the rising "S" curve is tied to "flight to safety" (hedge against inflation). The later part of the rising "S" curve is tied to "perceived shortage of oil." Look at the gold chart.
Update: a reader alerted me to that "something else that is going on." It turns out Sinopec is buying another oilfield / division in a South American oil company. As China continues to snap up these companies with all their dollars, at some point folks are going to "perceive a shortage" in world oil reserves. This is the article.
But China is also buying US oil assets, according to this Forbes article, back in February, 2010.
bRUCE,
ReplyDeleteThank you for all your efforts with Million Dollar Way.
A valuable source of Information on Bakken topics
in a timly manor. One of my first internet sights of the day.
Nick Anderson
Key West, Florida
305-394-2009
andersonic2@msn.com
The usa is going to chug also at 1-2 percent growth for a few years, but look at India, China and SE Asia.. the growth in these area's with over Half of the worlds population is projected to be 6-8 percent.. This is where the increase for oil demand will come from.
ReplyDeleteThank you for your kind comments. The daily postings are a hodge-podge, but the links on the right sidebar have lots of archived information. It's amazing how far the Bakken has come since 2006.
ReplyDeleteI agree completely. I am surprised at how the "talking heads" even on CNBC seem so sheltered. It appears many of them have not been out of NYC their entire lives. I don't think they understand what's going on in China. I don't know if you saw it, but scalpers are buying 20 - 30 iPhones at a time in China to re-sell at 10% premium. Folks still think of China as being poor; I think folks will be surprised how fast things move once China and India hit a tipping point with regard to growth. I liken it to what the US experienced in the '50's and the baby boom, but it will be so much more in CHINDIA, as I see folks now referring to China and India.
ReplyDeleteThe Dickinson press article contains a few curious sentences. Apparently, according to the lead sentence, Mr. Helm is some sort of miracle man.
ReplyDeleteThen this:
“Belfield is just kicking off, but we’re expecting to build to a five-rig program down here and run five rigs for 10 years,” Helms said.
The reporter may not be quoting correctly.
It's been my experience that reporters often get the quotes wrong. Reporters cannot be subject matter experts on all the stories they cover. I don't read these stories very closely; I mostly get the gist of what's going on. If there is something in any story that may affect an important decision I need to make, I seek out multiple sources. Thank you for catching this.
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