October 2, 2008 at 12:01 pm #3400
One reasons Forecasters are now pulling back to $50/Bbl Oil is the Exodus of Speculators away from Oil & other commodities – now at lowest point in 2 years – and the growing concerns over financial concerns & global recession reducing risk tolerance.
It is about time – hopefully some the speculating companies will be bankrupt or taken over due financial losses as well. Also it will be interesting to see if Chavez will be thrown out office if price drops below Venezuela revenue demand to support all Government programs. – Charlie Randall
—– Original Message —–
Oil Investor Exodus Speeds Up on Bank Crisis: Chart of the Day
By Grant Smith
Oct. 2, 2008 (Bloomberg) — The number of outstanding crude oil
futures held by traders on the New York Mercantile Exchange is
at the lowest in more than two years as global banking failures
heighten concern the economy and energy demand will slow.
The CHART OF THE DAY shows that open interest reported by
the exchange fell to 1.092 million contracts on Sept. 30, the
lowest since July 27, 2006. The upper part of the chart shows
that the 50-day moving average of oil prices dipped below the
200-day average for the first time in two years yesterday. A
short-term average falling below a longer-term measure is often
viewed by traders as a signal a market will decline further.
“It’s symptomatic of investors moving out of commodities
into other asset classes,” said Gareth Lewis-Davies, an analyst
with Dresdner Kleinwort Group Ltd. in London. “It’s a
combination of an increase in margin calls, the concern about
great regulatory oversight, and the supply-demand story in the
Oil prices may fall as low as $50 a barrel next year, about
half current levels, in the “unlikely” event of a global
recession, weighing on shares of petroleum producers, Merrill
Lynch & Co. said today.
Open interest in futures markets is defined as the total
number of contracts that have not yet been closed, liquidated,
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