Why crude could push over $150

Discussion in 'General Trading Discussion' started by Gomer, Apr 2, 2014.

  1. Gomer

    Gomer Well-Known Member

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    While traders were obsessing over the lack of stock market action in the first quarter, the price of West Texas Intermediate Crude moved over $100 a barrel.

    It’s a meaningful breakout for black gold which hadn’t found a firm foothold in the triple digits since the third quarter of last year.

    Optimists would think the global tensions in Ukraine and the absurdity that was last winter would have trumped Summer Driving Season’s annual increase in the rise of crude. Colorful CME trader Tres Knippa thinks crude is a raging buy at $100.

    “There’s been tension in the Middle East since the earth cooled,” Knippa observes in the attached clip, “so I’m kind of counting on that to continue.” As for the much vaunted glut of WTI in the U.S., Knippa sees little evidence of any such thing exists in the pits. “The glut is simply not there and whoever’s models are anticipating that I’d have to disagree with them.”

    If the above freaks you out you’re better off not hearing Knippa’s price targets. He says crude could be approaching $125 or $130 without any outside help. A little uptick in the Middle East would bring $150 into play and the previously unthinkable $200 level is a possibility if the world really comes unhinged.

    He’s loathe to put a timing target on the uptick but he’s more than happy waiting it out while crude bubbles. Until he sees a reversal in premiums being paid in the commodity pit, Knippa’s confident we’ve seen the last of WTI crude in the $80s.
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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  3. HeinrichM

    HeinrichM Active Member

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    If Knippa is correct with his predictions, it will impact on the pricing of a lot of the stocks. High oil prices tend to have a knock-on effect and this should open some opportunities for the crafty investor. The Middle East has been fairly quiet lately and you never know when it will start to bubble again. Should be interesting to see what expires over the next 6 months.
     
  4. ursell

    ursell Guest

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    Thanks for the helpful info. When don't oil up causing our gas to go up.
     
  5. wanderingwildman

    wanderingwildman Well-Known Member

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    I agree with Heinrich. The Middle East seems to be uncharacteristically quite recently. I really can not anticipate what some of the major players are going to do with the unrest in Russia. I will definitely consider doing some research on where to invest in the Middle East.
     
  6. crimsonghost747

    crimsonghost747 Senior Investor

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    Not a bad choice at all. I too think that in the medium term the price will rise. I've prepare by buying some PBT shares... higher oil prices lead to higher profit which leads to higher dividend payouts. I think that as more cars become electric and people are trying to find alternatives for oil in other industries too, the price could go lower at some point in the distant future, that's why I prefer to cash out at regular intervals via dividends.
     
  7. tinkerbell

    tinkerbell Member

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    Why would anyone want oil at or beyond $150? It would be another massive financial disaster for everyone on earth. It is simply unsustainable.

    If we look at the chart, it is too early to say. There is considerable resistance ahead of $120.
     
  8. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I'm pretty confident that it will eventually be over $150. It was at $140 briefly quite a few years ago. It's more a matter of "when" than "if" IMO.
     
  9. Fredrick Jones

    Fredrick Jones Well-Known Member

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    Crude oil is important in the manufacturing of plastics and other non fuel type things. As a result there will always be a demand for crude oil. China, India and Germany are investing large amounts of money on alternative energy. But even if they manage to get a breakthrough it will be at least 10 years before it can be put to use. This happens will all new forms of technology. So even if they invented a magic engine that ran on water, it will take 10 years before this engine is in production and then eventually adapted for commercial use.

    So for at least within the next 10 years, crude oil will break the $150 mark again/
     
  10. Corzhens

    Corzhens Senior Investor

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    From my estimates, the oil industry is still in a glut and the law of supply and demand will dictate a low price in the world market. I am just curious why Saudi Arabia seemed not to feel the pinch? Venezuela and Nigeria are already complaining because their economy is obviously affected. How about Russia and its oil farm in Siberia? I haven't heard of it for a long time. What's going on in that icy place?
     

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