Crude Oil Board

Weather and ample reserves seem to be keeping NG prices down. I n relation to crude, gold, copper and other commodities I believe it is way undervalued. Sooner or later commodity speculative buyers will realize this.

Report of an El Nino forming off the North American Pacific may hold prices from making any substantial gains in the coming months.

True; Perhaps NG is low. However there are a few unknown in the near future.

BC, Canada has 2 NLG ports under construction. This is to assist in supplying gas to the Canadian oil sands projects, which use a huge amount of gas to produce that valuable black gold.

This winter is expected to be mild, similar to last year, and thus the expectation for heating demand is lower than normal.

Inventories are high, so value for current production is decreased.

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Price cannot go down forever, but it doesn't necessarily have to rise much either. The current price reflects a relatively normal price point for gas. If the economy keeps slowing, and costs keep rising, Cdn oil sands may slow, and decrease their demand for NG. This will thus increase the supply, which will likely keep prices low until the world economy, and the US economy especially rebounds, perhaps by the end of 2007.

I am avoiding any investment in NG and OIL until March 2007 while the US elections proceed, Iran and Iraq issues play out, Isreal settles down, China's currency stabalized and a general world balance appears. It's a speculators market, and many of them have already gone to the sidelines. Many investors are now at over-weight cash, and seem to be just waiting for the bottom, and still waiting today.

World oil prices fell Monday amid market doubts about a pledge by the Organization of Petroleum Exporting Countries to curtail production, with many analysts believing the cartel will have difficulty fully enforcing a cut.

Light sweet crude for December delivery fell 52 cents to settle at $58.81 a barrel on the New York Mercantile Exchange. In London, Brent crude futures on the ICE Futures exchange dropped 76 cents to settle at $58.92.

Though OPEC's Friday decision to cut output by 1.2 million barrels a day to reverse a three-month price slide initially triggered a rise in prices, market analysts were mindful that oil prices are still twice as high as they were three years ago and that oil producing nations still have plenty of incentive to pump away.

"This last OPEC cut was misbegotten," market watcher Societe Generale said Monday in a report.

Oil prices have fallen by roughly $20 since a mid-July peak above $78 a barrel due to rising supplies, weakening demand growth and a milder-than-anticipated hurricane season.

Vienna-based analyst group PVM Oil Associates also said the Iraqi oil minister, Hussein Al-Shahristani, caused a stir this weekend by announcing that his country's oil production reached 2.86 million barrels a day this month, effectively passing prewar levels.

"However, these statements should be handled with care as they might rather be seen as an attempt to distract from the current political situation," PVM said, adding that according to its own data, Iraq's oil production this month would amount to 2 million barrels a day.

Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures, said "there's a lot of crude oil available in the market. Refiners would like to take less crude oil ... also, they're reducing refining operations."

He said that without fresh momentum, prices could fall further toward the mid-$50 range in coming months.

OPEC has a history of producing above its official quota when prices are high and analysts are therefore reluctant to accept the cartel's intentions at face value.

Moreover, many analysts see OPEC's action as proof that the group responsible for supplying more than a third of the world's oil is increasingly worried about slowing demand growth and burgeoning supplies from non-OPEC sources.

Oil prices have tumbled in recent months due to rising global supplies, a weaker-than-anticipated hurricane season and expectations for slower economic growth.

Nymex heating oil futures fell 1.1 cent to $1.669 a gallon, while gasoline futures slid less than a cent to settle at $1.4715 a gallon. Natural gas futures declined by 36 cents to settle at $6.881 per 1,000 cubic feet.

Hullo,
I'm a first year University student doing my BA in Finance and Economics.
You do know that the price for a barrel of oil is currently $88.96US. Nearly 3 times the 'reasonable' price of $25.00

I would like to now exactly how OPEC goes about fixing prices?
If the USA sold oil, would they charge a different price per barrel? what about other non-OPEC members?

Concerning the rising oil prices: Prices rise as a result of increase in world demand for oil, an oil by-products. This is directly tied to economic growth, which entails the increase in transport, electricity and industrial and energy-related activities. [list=][/list]

[b]im in awe ,i cant see why the prices of fuel keep getting higher and higher,then you have food getting higher and higher where does it stop,being on a fixed income with kids its just not right,my kids wanted to join sports this year i had to say no,first time in my life,i live in the middle nowhere so anyplace they want to go the show ect... they walk 5 miles if any one knows how to fight this please let me know im willing to do anything :x [/b]

We've used up all the cheap oil, so what's left is getting more and more expensive. That means everything that uses oil as an input is getting more expensive.

Since pretty much EVERYTHING in our modern lifestyle depends on oil, our way of life is unsustainable. Food, fuel, clothes, computers, technology - everything, even roads and car tyres need a lot of oil.

Some people think that if we go back to a "Little House on the Prairie" sort of lifestyle, it will be sustainable and that's true, however in the 1850s there were only 2 billion people on the planet. Now there are 6. So if we are to have a sustainable 1850s style existence, 2 out of every 3 people need to die. They are simply using too many resources that the planet is not renewing. Which group will your kids be in? The survivors or the deceased? Start training them now for what's coming.

Joining Boy Scouts are are good way to train kids on skills that will become essential when crude oil becomes too scarce to be affordable for transportation. You can find lots of books about Boy Scout training and if you live out in the country (it sounds you do) you will count your blessings when the SHTF.

JeriCan,

Thanks for the post. I have recently started following weather and its relation to commodity markets as well. I haven't, though, looked into the effect the Chile earthquake had on commodities from South America. Does anyone have any insight to share?