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Global Economy Bursting?

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Saudis announce they are cutting production due to an oversupply. Yet speculators and govt claims a shortage to drive up prices.
 
I think we have another speculative bubble but part of it is Chinese demand which is heating up its economy despite higher interest rates and higher margins required. The Chinese bubble, if it bursts, would cause a slow down in demand which would break the oil bubble...at least temporarily.

China is being hurt by QE 2...devalues the buck which they tied their currency to. And if they untie it, then the Chinese will go into a recession. This is going to be complicated. Meanwhile bring a bucket. The supply of oil in Cushing, OK is so high, they'd gladly sell you a barrel of oil for $82... :)
 
Terrel L. Shields said:
I think we have another speculative bubble but part of it is Chinese demand which is heating up its economy despite higher interest rates and higher margins required. The Chinese bubble, if it bursts, would cause a slow down in demand which would break the oil bubble...at least temporarily.

China is being hurt by QE 2...devalues the buck which they tied their currency to. And if they untie it, then the Chinese will go into a recession. This is going to be complicated. Meanwhile bring a bucket. The supply of oil in Cushing, OK is so high, they'd gladly sell you a barrel of oil for $82... :)
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SLB has been a good short lately, but not sure where it might bounce back at with what you state and Restrain claims?

Interesting point of view guys.
 
metal and oil

It will be interesting to see how the Saudi play will affect metal prices ... silver is at $43 ....


... right now, .... so much is going on now ..... I doubt it means much ... Saudi may dump or buy metals while cutting oil production .....
 
SLB has been a good short lately
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again, stock that gets frequent mention on the Financial networks rarely excite me... Drilling is increasing as rigs are shifted from searching for nat gas to drilling for oil using the same horizontal technology as oil. Eventually this nation has to transition in part to nat gas operated vehicles. T. Boone Pickens is right about that.
When it does then demand for new rigs will remain high and more wells means more work for Schlumberger which owns rigs, bit companies, tools, electric logging, labs, etc. These stocks are whipsawed by technical traders.

Look at WZL.TO Wenzel downhole tool. A start up company that is providing the equipment to drill with what was formerly called "turbine" drill a. k. a. downhole motors. This is a reflection of the build up in the business underlying the industry attempt to ramp up domestic production. It all rides on the price of oil and even if oil falls back to $70 a bbl, it is economic to drill for oil stateside...at least until Obama (if successful) succeeds in removing the Intangible Drilling Cost deduction from the tax code....a deduction that has existed since WWI, when it was recognized that high tax rates on investors led them to short term investing rather than the long term commitment necessary to invest in oil sucessfully. Removal of the IDC would cause me to sell every oil stock I have immediately and go to the sidelines. The stupidity of that action will be a year or two in damaging the economy but would cause an immediate slide in non-internally generated monies to drill with.

Look at Petrohawk... big time driller of shale... sold their Fayetteville assets for $1.90 per MCF (thousand CU. ft.) and ran a $1 b loss in 09. High P/E - will that ramping up result in future value? or, will they become burdened with so much debt they fold up? High prices = more drilling...high taxes = less drilling and eventually higher gas prices.
 
Competition is innate

nicholz12 said:
Interesting article from market watch wsj-

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I was playing golf with 83 yr old the other day ..... he thinks capitalism is the reason we are in the mess we are in ....

..... as he missed his put on the green .... I told him .... don't worry ...... if we go to any other system ..... you won't have to worry about competing ...... "competition" ...... while he likes to "compete" in golf ........

.... he ... like most on the left think what we have in this world is capitalism ........

.... what we have in this world and in our country is mobsters ... not capitalism ...

...

... a 100 years from now after the world has melted down .. ..... .some guy some where in some part of the globe is going to "hustle" to make something .... do better "himself" and his family ......

.... the socialists like competition on the golf course ...... but does not want to have to compete with other guy to make a buck ...... he thinks he is entitled ....
 
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