How To Play Oil

[mrmarket]

Back in late June 2008, before a barrel of oil was $147 in July, IBD had an article and the oil minister said that oil was over price, we will see a put back to $78 before end of the year and maybe $50 by mid 2009. At that time GS, Crammer, and others said that oil was heading $180 by September 2008; well we know they were all wrong. Others also said that $21 a barrel is still profitable.

My question, how would Joe the Plummer profit if oil tanks to $21 and maybe skyrocket back up $147 in the future. Does he buys oil ETF, options, or buys a barrel directly at the asking price? Any thoughts?

The price of oil has no ceiling, but it certainly has a floor price. The interesting thing is that since prices dropped so fast, people did not have adequate time to change their behavior to conserve.

In the meantime, in this lower price environment, all of the projects to find more oil have been shelved. When demand for oil picks up again, there is going to be a severe shortage of oil and $200 oil is a certainty.

[peanuts]

If we only knew oil was going to drop from $140...

Doug, you can now buy only 6 packs of cigarettes with that barrel of oil of yours. You used to be able to buy 23 packs.

1 ounce of gold would have bought 6.7 barrels in July. Now, 1 ounce of gold buys 23 barrels.

In July, one barrel of oil was equal to 39 Big Macs, now its only 10.

The Saudi's are broke ladies and gentlemen.... BROKE!!!!

[billyjoe]

Hey ,Peanuts, answer me this. What is more valuable now, a barrel of oil or a barrel of bottled water?

------------billy

[mrmarket]

Pretty good article

Most interesting to me was where he indicated that Oil Service stocks tend to predict oil prices:

http://seekingalpha.com/article/111594-opec-too-little-too-late?source=yahoo

[JohnHenry]

With the decline oil prices, wouldn’t it be a good idea to starting thinking about stocking up? Maybe not because there’s no storages and refiners are cutting productions?

How would we capitalize with the declining prices and capitalize when it rebound? Do we short and buy oil ETF stocks or buy puts and calls? Not sure how puts and calls work yet. We can’t buy a barrel of oil like we would buy a stock?

[mrmarket]

With the decline oil prices, wouldn’t it be a good idea to starting thinking about stocking up? Maybe not because there’s no storages and refiners are cutting productions?

How would we capitalize with the declining prices and capitalize when it rebound? Do we short and buy oil ETF stocks or buy puts and calls? Not sure how puts and calls work yet. We can’t buy a barrel of oil like we would buy a stock?

I think refining margins are about to explode.

[peanuts]

Hey ,Peanuts, answer me this. What is more valuable now, a barrel of oil or a barrel of bottled water?

------------billy

What brand of bottled water, and is it still in the bottle before you put it in the barrel?

A twelve ounce cup of coffee from my local filling station is $1.20 per 12 ounce cup, that's $12.80 a gallon! Gasoline only costs $1.70 a gallon at the same filling station.

Stky... don't worry about oil. Invest in yourself. Everything else will fall right into place.

[peanuts]

I think refining margins are about to explode.

I agree in the longer term (more than a year from now). If industrial usage is slowing down, it will take a bit of time for this decrease in demand to be replaced with new industrial usage. That cycle has yet to play out.

[JohnHenry]

ETFs

Happy New Year!

USO, PRNEX, and IXC...? When it does rebound.