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Oil up $25 a barrel today?
Old 09-22-2008, 01:47 PM   #1
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Oil up $25 a barrel today?

I woke up from my nap to see this hadline as I logged in to check e-mail. Could this be an unintended consequence of stopping short trading?

Oil spikes $25 a barrel on anxiety over US bailout - Yahoo! News
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Old 09-22-2008, 02:15 PM   #2
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More likely it's a result of the US Mint printing presses going 24/7.
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Old 09-22-2008, 02:23 PM   #3
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More likely it's a result of the US Mint printing presses going 24/7.

Agreed.... The value of the the dollar worldwide is going to continue to slump with this "bailout" . I sure hate passing this pain onto another generation.
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Old 09-22-2008, 02:59 PM   #4
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I can put downward pressure on a stock by owning it, but I can't stop the Fed from printing an infinite money supply. I seem to have hit my limits. Sorry, folks...
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Old 09-22-2008, 03:05 PM   #5
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This is a classic short squeeze, yes there is concern about inflationary pressure but the main driver today was too many shorts trying to cover their position before the front-month contracts are closed out.
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Old 09-22-2008, 03:34 PM   #6
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I agree with soupcxan.

I don't agree with how it's hit the financial press. It was a news headline on the radio ("UP 25% WHAT DOES THIS MEAN TO OUR FRAGILE ECONOMY?" almost a panic shout. The 9/11 impacts were more subdued.). I turned on CNBC when I got to where I was going and it was a big topic but the short squeeze was mentioned. We should see oil about $15 lower tomorrow based on the November futures. Spot didn't budge. Refinery margins are currently very tight due to continuing poor demand (not inside info but somehow nobody seems to hear this). This ultimately means crude will continue to fall unless somehow the economy magically begins growing at 10%.
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Old 09-22-2008, 03:40 PM   #7
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Those dumb shorts!

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Old 09-22-2008, 03:44 PM   #8
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Those dumb shorts!

Audrey
Been there, done that, couldn't afford the T-shirt.

You really don't know "tense" until you're on the wrong side of a short squeeze. I don't play in that sandbox anymore.
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Old 09-22-2008, 03:45 PM   #9
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Those dumb shorts!

Audrey
Seemed like a good day to close out my USO position, but as soon as I do that, oil would go to $200 and y'all would hate me...
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Old 09-22-2008, 03:52 PM   #10
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Seemed like a good day to close out my USO position, but as soon as I do that, oil would go to $200 and y'all would hate me...
USO went up but I don't know how much of USO might have been tied up in the latest contract. The other contracts went up between $5 and $6 which is consistent with the spot prices. Who knows what tomorrow might bring?
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Old 09-22-2008, 05:24 PM   #11
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Seemed like a good day to close out my USO position, but as soon as I do that, oil would go to $200 and y'all would hate me...
Hang on to it Ziggy! We're counting on ya to help keep our energy costs down
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Old 09-22-2008, 05:55 PM   #12
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Ziggy, thanks for the help.
You can't hold yourself responsible to everything though.
When you have had enough, sell. You gave us a little reprieve and it is appreciated
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Old 09-22-2008, 06:24 PM   #13
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Ziggy is slacking.
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Old 09-22-2008, 06:55 PM   #14
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Seemed like a good day to close out my USO position, but as soon as I do that, oil would go to $200 and y'all would hate me...
USO will hit around $90 -$92 and will probably go back down from there
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Old 09-22-2008, 08:22 PM   #15
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From a Morningstar discussion thread:

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It was all about a temporary shortfall of physical oil. WTI is a midwest (landlocked) crude that can only be consumed in the midwest (it cannot even come to the GC). The P/L from USGC to midwest that carry crude are rigged to flow north from US Gulf coast to midwest. They cannot be easily reversed. Hurricane IKE had disrupted a few of the refineries and their main crude P/L (Capline) was also down for a few days because of hurricane's impact, so no foreign crude flowed north.

One or 2 midwest refiners tried to buy small parcels of physical WTI crude and bid up the prices. Since October contract was expiring, the NYMEX volume was already thin and there is no "rolling" that demand because refiners needed crude NOW. Thus, Oct contract closed at $121, but Nov (now the new front month) closed at 109 & change. They don't need Nov volume because the foreign crudes will fill that void coming up from Capline. Hope that helps ... Anil
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