Futures charts; May 17th

Trading has not yet begun; so the charts will remain showing old values until futures market begins trading. 

Indexes 

Energy 

Metals

Agricultural commodities

Diversified 

Bonds

Currencies 

Recommended read: Erich Fromm: "To Have or to Be"

Erich Fromm - To Have or to Be (1976)

Comments

[Sudden Debt]

It reminds me of some saudi's saying 72$ was a fair price for them.

No europe is on the brink, I wouldn't be surprised that they brought it down to 72$ to give Europe some space and air to fix their problems before energy kicks in their inflation to much.

Me paranoid? WHO SAID THAT!

[banksterhater]

It won't go below 70 cuz almost every exploration in the world needs 70 to break even.

OPEC even said it. The refiners shutin 35% of capacity to keep prices up. COP going to idle another one, always happens before driving season to reap most profit.

[Gully Foyle]

http://theautomaticearth.blogspot.com/2010/05/may-16-2010-oil-credit-and...

Q: If we have $20 oil there will be no crisis, guaranteed. $20 oil and we have lots of credit/money expansion. Multipliers working and inflation/growth. We would have commerce. We would all be buying shit from (low- wage/cheap coal) China.

Stoneleigh: I disagree. I think we will see $20 oil, but only because of a massive fall in aggregate demand due to the evaporation of purchasing power. $20 oil will not be cheap oil. On the contrary, it will seem very expensive to most people.

That is what deflation does - prices fall but purchasing power falls faster, making almost everything less affordable. As a much larger percentage of a much smaller money supply will be chasing the essentials, they will receive relative price support, meaning that their price will fall less than everything else, so the essentials will be the least affordable of all.

As with many things, demand collapse sets up a supply collapse and a resource grab, so we could see oil go from $20 to $500, if in fact there is any oil left on the open market at all by that point. Since oil IS hegemonic power in a very dangerous world, that may not be the case.

Prices can rise in a deflation if there is a sufficient shortage of a critical good (just as they can fall in inflationary times if there is a sufficient surplus or production costs are falling rapidly). If prices are rising in nominal terms, they are going through the roof in real terms against a backdrop of a collapsing money supply.

Q: Oil shortages (relative to credit- fueled demand) force an allocation regime on a 'super- size me' economic model of 'all of the above, please!'

Stoneleigh: By the time we have oil shortages, we won't have any credit-fueled demand because there will be no credit. First we lose the credit, which cripples purchasing power, then we lose demand (where demand is not "what you want", but "what you can pay for"). We'll have a temporary glut of oil, which will kill investment.

The lack of investment in new production, and lack of money for maintenance of existing equipment, and potential sabotage of existing equipment by those with nothing left to lose, set up a supply crunch. By that point very few have any purchasing power at all, and none of it credit-based, but governments and their militaries will be chasing down whatever is available for their own use (and hoarding where possible).

[jdrose1985]

Thank you for the link, interesting take on things.

[Madcow]

$65 is Opec's line in the sand.  That's when it starts to get dicey paying for prince disbursements, social spending, and revolution prevention measures.

Beyond OPEC, most oil recovery technologies (especially high tech unconventional) is dead in the water < $90. 

if we go back to the dark ages here, there won't be as much need for oil.  So, you won't miss it when its gone.  If you're living in Maine, and are handy with a harpoon - maybe you can convert to whale oil - 

[hedgeless_horseman]

Sorry, Sir.  Your number is way, way, off.  Internally, XON needs high $30s to cut the nut.

[banksterhater]

Opec & many other oil analysts have said repeatedly all NEW PROJECTS need $70 oil to pencil out. I'm not talking about XOMs old fields.

[whatsinaname]

what happens when volcanic ash mixes with light sweet crude ?

[ZeroPower]

That might be right for internal-only purposes (eg: actually getting the crude out of the ground to churn a profit) but after refining it, any storage costs, transporting it to X facility, added premiums etc, then i have also heard the $70target as the b/e point.

[Mongo]

Jean-Claude Trichet can start to sweat!

[banksterhater]

Any strength in Euro, USD is at resistance, (rsi 79) that gap could fill, no?