Skip navigation
MOST POPULAR RELATED TAGS
  • TOPICS
  • SECTORS
  • COMPANIES

Current DateTime: 11:54:21 25 Nov 2009
LinksList Documentid: 23371764
    • Gold Will Collapse Like Oil Did in 2008: Charts

        The gold price has moved quickly and it has developed an important new uptrend characteristic. This so-called 'parabolic' trend is a dangerous type with a high probability of a sudden collapse.

RSS FEED

» Help

Current DateTime: 11:54:21 25 Nov 2009
LinksList Documentid: 30111251
powered by digg
Fast Money DisclaimerFast Money BiosAbout Fast MoneyRapid RecapFast Money Home
Text Size
Nov.20
9:42 AM ET
Thursday, 20 Nov 2008
Oil at $50, Heading to $45 or Lower

Oil is pushing to new lows and is down nearly $100 / bbl from recent highs.   Can it go any lower?  Some data seems to say yes. 

The crack spread between gasoline and oil futures, for example, has recently gone negative (chart below),  implying the cost of gasoline is less than the raw material it is made from.  Does that mean that gasoline is too cheap or that oil is too expensive?

 

John Kilduff, SVP and Co-Head of MF Global, told me that the crack spread is unbelievably negative, hovering right now at negative $7.  "Historically, that number should be between positive $5-6," explained Kilduff.  "Gasoline prices are way ahead of crude right now.  At comparable levels, we project oil at about $46 / bbl," adds Kilduff.

Looking at retail gasoline prices, you get similar results.  Below are two charts:  one showing the national average price of retail gas / gallon (per the EIA) and crude oil, the second shows the relative price of one to the other in $/bbl.  Over the past 10 years, the trend slopes downward, showing that gas has fallen faster than oil.  The last time oil was near $50 /bbl, retail gas was about 10 cents more per gallon than it is today.

The average multiple of retail gas to crude oil for the past 10 years is 1.9.  With the average national price of gas at $2.03 / gallon as of Nov 17, oil would need to be ~$44 / bbl - just under Kilduff's estimate. 

Using the 20 year average of 2.2, the price of crude should be even lower - $39.52 / bbl!  Rebecca Jarvis reported on CNBC this morning that Deutsche Bank is projecting oil at $40 /bbl as well.

Some energy companies falling heavily with oil include:

  • Peabody Energy [BTU  Loading...      ()   ]
  • Consol Energy[CNX  Loading...      ()   ]
  • El Paso [EP  Loading...      ()   ]
  • Weatherford Intl [WFT  Loading...      ()   ]
  • Williams [WMB  Loading...      ()   ]

Comments?  Send them to

bythenumbers.cnbc.com

© 2009 CNBC.com

Tools:
PrintEmailAdd This share icon
Next Post
  • digg share

CNBC HIGHLIGHTS

  • For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
  • Eric Schmidt pledges to create a virtual copy of the Iraq National Museum at Google’s expense.
  • Bill Griffeth is taking a leave of absence from CNBC and Power Lunch for a year. Here's a message from Bill.
  • More shoppers than ever plan to comparison-shop this season. Who will benefit?
  • It may be the most unusual guide to business you'll read.
  • Cut Credit cards
  • How can you get out of debt and back on the road to recovery? Follow these ten steps.
ADD COMMENTS
Remaining characters


Current DateTime: 12:56:54 25 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 10:38:03 25 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 11:10:59 25 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 10:38:03 25 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters