About Oil Prices

Muna wa Wanjiru asked:


There are many forms of fuel that we can use for our lives and businesses. These sources include electricity, solar energy, fossil fuel and of course oil. The oil that we use originally comes from crude oil. This crude oil is the pure form of oil. For this reason the crude oil future can be somewhat difficult to predict.

There are many companies who will seek to buy the crude oil that is drilled. For these companies the crude oil future is one which is very important to gauge. Without having a proper analysis of the numerous industries who use this fuel source the oil importing companies will not have any idea about the amount of crude oil they should consider importing.

The crude oil future will need to be given much thought as the production count is measured in the amount of oil barrels which are filled. These oil barrels are the measurement amount for knowing the way that the oil should be distributed. With this knowledge the many governments can negotiate the price to pay for their share of the crude oil.

This however does not guarantee the crude oil future as with so many oil spills on land and the oceans there are some countries which are considering other ways of finding the crude oil they require. There is also the other problem of various countries needing the byproducts of the crude oil rather than the crude oil itself. This situation makes the crude oil future very hard to predict.

On the one hand the crude oil is not needed as other fuel sources are found and used. Yet as these new fuel sources are the byproducts of crude oil itself, there is a confusion to be found. It is this uncertain atmosphere which hinders the ability of knowing what the crude oil future is like.

To help the customers out perhaps the governments should find a way of locating and refining the oil at the same processing plant. This step would lower the costs the companies and governments need to pay. This is yet another solution to the crude oil future uncertainty.

Crude oil in all of its many forms whether it is refined or not is a commodity which is sorely needed. You can use the price range as a way of seeing the crude oil future. When the oil prices are high it means there is a demand for crude oil and the low prices mean a drop on the crude oil demand.



Gary

NextMove asked:


Hey,

Just wondering if anyone can predict the oil prices tommorow, will they rise or continue to fall?

If there is a right answer (im not sure if its completely unpredictable) to this question then I will really apprreciate it if you explain to me how you concluded this.

Thank you for reading, Im looking forward to your answers.

Lucille

Entidine asked:


I need to make a bulk purchase of home heating oil for the winter and I’m wondering if now is the time to place my order. I did last July and got hosed when prices plummeted in September. Where can I go to see home heating oil price average nationwide?

Rodney

Wayward_Son asked:


Oil per barrel has dropped to $111 from $119 over the last week, but gas prices continue to rise each day, Whats up with that?

Fernando

JD asked:


If crude oil prices continue to fall and stay around a hundred per barrel, shouldn’t airlines stop charging for check-in baggage? I could understand if you carry more than 2 check-in baggages but with just one check-in baggage… Wasn’t that the main reason why airlines started charging for check-in luggage in the first place? Cause of high oil prices!

Jon

Chris Vermeulen asked:


Trading Risk/Reward

The past few months have been absolutely crazy in the financial markets. Financial advisors and banks are taking a beating from both the market condition and clients as individuals around the world are losing 30+ of their investments. We have seen oil prices drop over $110 per barrel from the high (73% decline), and the US dollar tumbled down to 71 and rebounded to 88 (23% gain) all in the mater of months.

Risk Management is what is needed if we want to stay in the game over the long term. Follow strict risk/reward rules is a must so that we don’t not get caught chasing stocks and funds only to have them turn around on us a few days later.

Focusing on keeping risk low for potential trades is crucial for turning a profit over the long run. In short I look for a basket of indicators including candle patterns and volume to be in favor when buying or selling a stock or fund. When a fund generates a buy signal I wait for a low risk entry point near my support or resistance level depending if I am looking to go long or short. I need to see a perfect setup so that the odds are favoring my side. Only then will I take a stab at the market. The biggest issue with this is that I do miss a lot of good trades, but the key here is that most of my trades are profitable and that is what makes it so powerful. I would rather make 20 trades a year, than 150 trades and make the same profits.

This Weeks Analysis on Gold

Gold continued its push higher last week getting a lot of investors and traders all excited. The daily chart does look strong and it is currently on a buy signal. But buying at this level is much too high of a risk.  The price of gold is trading at the top of its 4 month trading range which previously led to a 20% selloff in bullion. Our support trend line is 10% away from the price of gold making it out of reach still. I trade reversals when risk is only 3% from my stop/support price.

Daily Gold GLD Chart



Gold Stocks

Gold stocks have been struggling to move higher and last Friday gold made a nice move higher while gold stocks sold down. My last article talked about how trading gold (GLD) may be a better investment then gold stocks right now simply because of the bearish broad market. The broad market looks like it’s about to make another leg lower and when the broad market sells off, it pulls all stocks with it. The daily chart of the HUI Gold Bugs Index shows precious metal stocks moving sideways while gold pushed higher. When gold stocks start to underperform the price of gold I tighten my stops and mentally prepare myself for gold to pull back. The smart money always seems to move in and out of stocks faster than the commodity which is a topic I mentioned in a previous report as well.

Gold Bugs Index Daily Chart



Crude Oil Analysis

Crude Oil has been under continuous selling pressure for the past 7 months and this is the first buy signal I have had for it since it topped back in July 2008. The weekly chart is very close to a buy signal. If you look at the weekly chart of USO crude oil fund you will see that volume has shot through the roof which generally indicates a turning point. Also the MACD indicator is about to cross which will put this fund on a buy signal if things go well all of next week. The support trend line is trending up slightly and the down trend line is holding the price inside a small triangle. If the price breaks out and all my indicators are putting the odds in favor of a long trade, then we will be looking for a buy point on the weekly chart in the next few weeks. The weekly trading signals are good for intermediate and long term traders.  

Crude Oil (USO) Weekly Trading Chart



Conclusion:

The broad markets continued to move lower last week as it remains in a long term bear market. For those looking to take advantage of gold, silver and oil movements I recommend sticking with the commodity funds as they can increase in value while the broad market is selling off. The daily chart of the hui gold bugs index shows this clearly as gold stocks in general are underperforming the price of gold right now. There is an opportunity for oil to make a move higher if things come together in the next couple of weeks but until then we will be patient and let the trade come to us.

If you would like to receive my free weekly reports please visit my website: www.TheGoldAndOilGuy.com

Chris Vermeulen



Joe

drbob asked:


While acknowledging that current oil reserves worldwide are continuously being depleted, it seems to me that oil prices are now being governed not by supply and demand issues, but are being fuelled ( pun intended) by artificial worries based on “What if” scenarios, none of which have actually happened. Are we then just being taken for a ride by oil companies?

Florence

Jennifer Stromsteen asked:


Quite a while ago I predicted that crude oil prices would top $130 per barrel in 2008. My forecasts were correct. Crude oil topped around $147 per barrel a few short weeks ago. Since that time, the price has fallen dramatically to around $113 per barrel today.

Are prices going to stabilize here? Will prices fall further? Or is this just a temporary correction in an ongoing trend of ever increasing oil prices?

My opinion is the latter.

Here are some facts:

1. Production at Mexico’s giant Cantarell oil field is falling dramatically Crude output from Cantarell, the world’s third-largest oil field, is falling at the fastest pace in 12 years, down a stunning 34% in May, 2008 from a year earlier, or a loss of more than 540,000 barrels a day.

I had originally thought that Mexico’s oil exports could halt by the end of 2010. It seems that I was too optimistic. Recent reports are that Mexico’s internal demand coupled with the shrinking supply are creating the conditions for Mexico to switch from being a net exporter to a net importer much sooner than 2010.

Naturally, falling production is curbing exports to the U.S., which buys about 80% of Mexico’s oil exports. Sales to the U.S. tumbled to 1.07 million barrels per day in May, 2008 from 1.4 million barrels per day in September, 2007.

2. World demand is growing rapidly. Here’s a fact that you probably were not aware of: the United States actually exported more than 300 million barrels of oil last year. Given the political talk about decreasing our dependency on foreign oil, it’s an oddity, indeed, that the oil companies would be selling domestically refined gasoline, diesel fuel and other products overseas. Why not just sell it domestically? Because other countries are willing to pay, simple as that.

Half the world’s population is now emerging out of their poverty onto a plain where they need oil just as much as the developed world. $2,500 cars are now becoming available in China and India and the rest of Asia. More than 20,000 new cars per day are being sold to Chinese citizens who have never owned an automobile before. Additionally, a steady 10% GDP growth per annum is predicted to continue for the next decade at least, confirming that demand for oil will not slow at all but continue to increase even more.

Other factors include the recent military actions in the country of Georgia, tensions with Iran, and the sinking value of the dollar on the world currency market. Even without these factors taken into consideration, it is not hard to imagine oil prices topping their recent record of $147 per barrel.

It could even happen before Christmas.



Kelly

conker fr3sh asked:


Crude oil has slipped a bit lately, yet gas prices continue to soar across America. Will gas prices ever go down because of the decrease in price or future price of crude oil? Why do gas prices not go down when crude oil prices go down?

Phyllis

Duncan Freer asked:


It is a strange fact that as oil prices soar the number of jobs within the oil industry, especially in ‘upstream’ exploration and production, actually increases. As oil becomes more expensive more and more is needed to reduce the price. The Oil and Gas Industry is huge because the use of these natural resources is present in every aspect of modern life. Not only are these resources used as fuel but are ever present in the manufacture of everyday materials such as plastic, itself omnipresent in today’s world.

Within the Oil and Gas industry exploration is one of the fastest growing areas. As oil runs out, new reserves have to be found. Also newer methods of obtaining the oil need to be researched and developed. As the more accessible oil fields are used up new oil fields are found that are simply unobtainable through existing drilling methods. The exploration sector of the Oil and Gas Industry covers jobs such as geologists, drilling engineers, reservoir engineers and production engineers.

Commonly if there are cut backs in the ‘upstream’ jobs then there are cuts across the whole of the sector; similarly the adverse is also true. With an increase in jobs in the ‘upstream’ sector more jobs become available in the ‘midstream’ and ‘downstream’ sectors. Midstream jobs are concerned with the transportation and refining whereas downstream jobs are wholesalers and retailers. Of course there is a period of delay whilst upstream jobs increase in order to find new reserves, or easier ways of drilling existing reserves, but once more oil is made available for production and sale then the demand for midstream and downstream jobs grows proportionately.

Simply put, as oil prices soar, more oil is needed to bring the cost down and as jobs increase more oil is needed to work with. New oil reserves are found on a regular basis. Last year, for example, Brazil found a huge new oil reserve off of its coast. The new reserve, believed to contain between 5 and 8 billion barrels of attainable oil, is set to make Brazil one of the world’s largest oil producing nations. What’s more it is set to guarantee job growth in the sector into the near future.

So, even within the current economic climate of a global crunch, there is one market sector that is set to expand regardless. Whereas in other sectors, such as construction, jobs are being cut Oil and Gas Jobs are on the rise at all levels in upstream, midstream and downstream areas. In order to combat the affect that increased oil prices will have on every other aspect of life and in every other job market an increase in jobs in this sector becomes crucial.

Oil and gas price increases affect us all; not only does heating our homes become more expensive but so does the price of a loaf of bread as transportation costs grow due to fuel price increases and so on. Therefore the exploration and discovery of new reserves becomes a major priority; good news if you are looking for one of the rewarding jobs in this sector.



Leon