Four Things are Suppressing Oil Prices Today

 

Economic Concerns are Offsetting the
“Iranian Factor”
by Dr. Kent Moors

Dear Oil and Energy Investor,

The collapse of talks between Iran and the “Big 6” (the five permanent members of the UN Security Council plus Germany) should have accelerated international crude oil prices.

And yes, they are higher.

But the real spike hasn’t hit. Not yet.

The rising crisis atmosphere in the region and the genuine possibility that a fourth round of talks between the two sides will not even take place should have renewed the upward movement.

That hasn’t taken place yet, either.

Oil prices are caught between the normal dynamics of geopolitical concerns – which push prices north – and continuing concerns over a global economic slowdown – which results in lowering expectations.

Now, this limbo is a delicate balance; it could change in a matter of hours.

We are likely to see a short-term rise this evening if the Norwegian oil and gas sector strike is not averted. Labor negotiations between Norway’s oil workers and employers over pay and pensions failed – yet again – yesterday. The country is now just hours away from the first complete shutdown of its oil industry in decades. (Already, the strike has cut oil output by 13%, according to Reuters.)

Then there are the figures coming out from the Energy Information Administration (EIA) on Wednesday, which will almost certainly show a drawdown on U.S. inventories. Normally, that would also push up prices.

However, absent an Iranian move against the Strait of Hormuz or a major refinery accident somewhere in the world, the rise will be less than usual.

That’s because right now, four things are tempering the oil price rise:

• Market worries over continuing Chinese expansion;
• Spanish bond interest rates in excess of 7% (again);
• Sluggish job growth in the U.S.; and,
• Expectations of lower earnings reports.

I told Fox Business on Friday that the range for crude prices short-term should be $92-$95 a barrel in New York and upwards of $110 a barrel in London. Without the offset caused by the economic angst, each price ought to be at least $25 per barrel higher.

Last week, I noted that using employment as a forward indicator of expected oil prices is looking at the problem in the wrong way. Job growth is the most lagging indicator factor there is. It does not telegraph a change; it registers it (in either direction) well after the fact.

Overall economic performance is widely used as a more proximate gauge. Nonetheless, whether it is Chinese production, American inflation, or European performance, the projections are nowhere close to the levels doomsayers are disseminating.

But pushing the negative side does allow short artists to get additional return while not actually playing off the market underpinnings at all.

I recently gave a briefing to several international asset fund managers. During our conversation, I suggested that the near-term short cycles had pared between 10% and 12% of the actual market price of crude oil. The figures I crunched kept telling me the market really justified a contraction of between 9% and 12% in oil prices from early May through late June.

What we actually received was a cut closer to 22%.

Now granted, giving such a briefing to that crew was like lecturing the fox about raids on the hen house. Most people in that audience were orchestrating the precise artificial pressure about which I was speaking.

Still, the quickest way to end that practice is to have a couple of major daily spikes in price to force them to cover shorts and unravel positions. Yet, until theperception of market direction changes, they are able to restructure a short movement in a couple of sessions and start the whole (artificial) cycle all over again.

What is it going to take to break the hold manipulation has placed on the oil market?

The Internet is to become 85000 times faster!

 

How Light Will Make the Web 85,000 Times Faster – and Power Blazing Fast Computers 

BY MICHAEL A. ROBINSON, DEFENSE AND TECHNOLOGY SPECIALIST

Since the dawn of the Internet, millions of users have dreamed of getting true high-speed connections.

Well, fasten your seat belts folks…

A new breakthrough promises to provide Web and other computer networks links that are 85,000 times faster than what we have today.

No, that’s not a misprint. But it is so fast it’s hard to get your mind around-especially for those of you who remember using phone lines to surf the web.

Back then it seemed you could take a break, paint your house, cut the grass and clean the kitchen — and still get back to your computerbefore it finished downloading a photo. 

Forget video. That sounded like a sci-fi fantasy.

Admittedly, it’s gotten quite a bit faster since then. Over the past decade millions of users around the U.S. have joined the broadband revolution. It’s now becoming standard to link to the Web at speeds of at least 10 megabits per second, or about 175 times faster than dial up.

But even at those speeds, the magnitude of the change I’m describing is hard to fathom. But I’ll try.

Think of it this way: If dial up was a one-story home, then today’s broadband would stand almost twice as tall as the Empire State Building. 

Yet, to equal what I’m calling Ultimate Broadband–or 85,000 times faster than what we have now– you’d have to string Empire State Buildings 1.3 times around the entire surface of the Earth!

Internet Speeds Beyond Belief

It works using twisted beams of infrared light.

Now you know why this innovation will be so crucial for the future of broadband communication and entertainment. 

Having just upgraded my home theater, I can speak from personal experience. Super-fast connections are what’s driving the next wave of home entertainment and data services.

And here’s the thing: you won’t need wires to take advantage of these incredible speeds.

In fact, a global team lead by the University of Southern California used wireless gear to prove the system works. They achieved speeds of 2.5 terabits (2.5 trillion) per second.

They beamed data over open space in a lab. The idea was to simulate the type of link that might occur between satellites in space.