Oil Contrarian Sees Bubble Ready To Burst

[delldude]

At $50.00 and falling FAST this morning. Crude inventories announced @ 3.6 million. Gasoline inventories stood @ 800,000 barrels. The market was expecting 100,000 barrels! Look for oil to fall to 45 min. Huge slide. I hope the speculators loose their :down: shirts!

[post="262095"][/post]​

inventories should be on the rise.....notice traffic is way down most times as of late?
there are still rush hour snarls and such but i think more people are driving only when neccessary.....this should create an inventory surge.........

 

[autofixer]

INFO: http://quote.bloomberg.com/apps/news?pid=1...efer=news_index

The oil pie gets smaller and the price will stay high (Above $40).

 

[AgMedallion]

At $50.00 and falling FAST this morning. Crude inventories announced @ 3.6 million. Gasoline inventories stood @ 800,000 barrels. The market was expecting 100,000 barrels! Look for oil to fall to 45 min. Huge slide. I hope the speculators loose their :down: shirts!

[post="262095"][/post]​

There's someone on the other side of all those oil futures contracts. So for every "speculator" who'll "lose his shirt", there'll be another one laughing all the way to the bank!

 

[autofixer]

ALso, when SWA announced their huge profit this morning, they also announced that they are hedged at around $30 through 2009. Someone over at LUV must be seeing what I am (So it must be obvious for anyone who wants to see the truth).

http://www.southwest.com/investor_relation...s_releases.html

I personally and for my business and the airline do not wish oil to sell above $18, however, that being said, the truth is what it is and it hurts.

Info: Unleaded gasoline futures for May delivery are selling at $1.47...add your Federal and State taxes and you get the rough price of unleaded for May.

 

[Harry Callahan]

Hmmmm...

Talked to 2 USAirways pilots this week on seperate occasions. (Great guys by the way.) Both based in New York. Both know Mr. C.M. aka USA320pilot. Both rolled their eyes at the mention of his name. (of course they MUST be malcontents. :blink: )

Every US pilot who knows him personally, has the same response. How can that be?

[post="262212"][/post]​

It's the same way here in CLT with the pilots & crew schedulers..........

 

[madders]

ALso, when SWA announced their huge profit this morning, they also announced that they are hedged at around $30 through 2009. Someone over at LUV must be seeing what I am (So it must be obvious for anyone who wants to see the truth).

http://www.southwest.com/investor_relation...s_releases.html

I personally and for my business and the airline do not wish oil to sell above $18, however, that being said, the truth is what it is and it hurts.

Info: Unleaded gasoline futures for May delivery are selling at $1.47...add your Federal and State taxes and you get the rough price of unleaded for May.

[post="262225"][/post]​

I read somewhere that ther $30 per barrell hedge will run out sometine in the first quarter of 2006

 

[insp89]

ALso, when SWA announced their huge profit this morning, they also announced that they are hedged at around $30 through 2009. Someone over at LUV must be seeing what I am (So it must be obvious for anyone who wants to see the truth).

http://www.southwest.com/investor_relation...s_releases.html

I personally and for my business and the airline do not wish oil to sell above $18, however, that being said, the truth is what it is and it hurts.

Info: Unleaded gasoline futures for May delivery are selling at $1.47...add your Federal and State taxes and you get the rough price of unleaded for May.

[post="262225"][/post]​

autofixer, I read the Southwest articles that you posted.

While it is true Southwest is hedging fuel thru 2009. You seemed to forget the PERCENTAGE of their fuel being hedged is dropping signifigantly from 2006 thru 2009.

 

[markkus757]

I believe Southwest has done that on purpose. The farther in the future you go the less acurate you can forcast. As they go forward, they will add to their hedging as they need it. This still puts tremendous pressure on the rest of airlines to fight or die. Right now, no major can cut their costs low enough to compete. Only reduced capacity will force people to pay more on average after all of the cheap seats on Southwest are filled.

 

[insp89]

I believe Southwest has done that on purpose. The farther in the future you go the less acurate you can forcast. As they go forward, they will add to their hedging as they need it. This still puts tremendous pressure on the rest of airlines to fight or die. Right now, no major can cut their costs low enough to compete. Only reduced capacity will force people to pay more on average after all of the cheap seats on Southwest are filled.

[post="262288"][/post]​

Markkus, I agree with you that Southwest has decreased their Percentage of hedged fuel from 2006 thru 2009 on purpose...

Obviously it all depends what the price of oil will be in the foreseeable future if it will even be worth hedging fuel.

 

[local 12 proud]

reduced capacity? what a joke, as the Major's lose ground and cancel New aircraft orders the LCC's are getting rock bottom prices on new jets and back filling the vaccum. SOUTHWEST is growing and continues to beat the competition at every turn, its been a long time coming folks just keep those heads buried in the sand....!

 

[Busdrvr]

I believe Southwest has done that on purpose. The farther in the future you go the less acurate you can forcast. As they go forward, they will add to their hedging as they need it. This still puts tremendous pressure on the rest of airlines to fight or die. Right now, no major can cut their costs low enough to compete. Only reduced capacity will force people to pay more on average after all of the cheap seats on Southwest are filled.

[post="262288"][/post]​

Going forward, hedges aren't going for 30 a barrel. And going forward, every other airline can hedge at the exact same prices as SWA.

 

[FWAAA]

Going forward, hedges aren't going for 30 a barrel. And going forward, every other airline can hedge at the exact same prices as SWA.

[post="262332"][/post]​

Sure they could, and would, if they had the excellent credit rating and large cash balance enjoyed by WN. But none of the legacy airlines have either, and thus will have to do without such extensive hedging.

 

[fr8tmastr]

I know this is fanstasy but... wouldnt it be great if we could give the people what they think they are asking for? All the legacy's just shut down. The result, Drastic international cuts, no service at all to small cities, and the immediate raising of ticket prices by the "wonder carriers". Even if these carriers were as pure as the driven snow, they would have to pay for the new airplanes especially international types, hire the new employees, pay for all the additional parts and support for multiple types. Pay for all the additonal cost associated with covering the smaller communites. Yea I know its fantasy, but there are a lot of realities many refuse to consider when they compare these vastly different types of operations. And then after the new legacies are in place the new United, Delta, etc. can come in and fly from just the best cities and, well you get the point.

 

[ClueByFour]

Going forward, hedges aren't going for 30 a barrel. And going forward, every other airline can hedge at the exact same prices as SWA.

[post="262332"][/post]​

Sure. All the ones with massive amounts of unencumbered cash laying around that don't need to beg the court and creditors for approval to do so, and those who don't need to hoard that cash to keep operating. Allow me to lay that list out:

 

[autofixer]

insp89, You are correct about the percentages, however, it would be foolish to totally hedge 4 years out. Even so, hedging 25% or so is pretty bold 4 years out. I think that if SWA thought fuel was comming down in the next 4 years, they would not hedge at all. The tea leaves are clear about sustained high crude prices indefinitely.

When an OPEC member becomes a net importer of crude, that cannot be a good thing for the US. Southeast and mainland Asia are booming and their demand for crude is becoming insatiable. A booming economy is why an OPEC member, Indonesia, cannot produce enough crude, even with western oil companies assisting.

As a result, look for China to become more involved in Southwest Asian (Middle Eastern) events in the not too distant future...all for oil. Iran will most likely look to China for an alliance (as they distrust Russia) and a protector against Israel and the US. Iran will begin to threaten the region with their nukes and they will have their big brother to back them up. The point of all of this is the oil producing regions of Southwest Asia are going to become more and more unstable in the near future, and as a result oil will stay high in price. You will not only have high demand and an artificially low supply at work, but also political pressures and the resulting destabilizing effects driving crude prices in the US and Western Europe even higher. China will work deal to keep their prices down. Remember the axiom: "Those you trade with you do not war with" (that can apply to economic war as well).

High crude (>$30) is not a short term problem. It is here to stay. Sure there will be the normal ebbs and flows of the market, however, the trend is and will be higher sustained prices. How high? The market will determine that, no-one can really know. The hedgemaster at SWA is reading the tea leaves and is acting accordingly. Oh yea, tea comes out of Asia too.

http://news.ft.com/cms/s/e74d1146-aceb-11d...000e2511c8.html

http://news.xinhuanet.com/english/2005-04/...ent_2832113.htm

http://news.xinhuanet.com/english/2005-04/...ent_2832113.htm