Another Wall Street bailout boosts oil to $53

[Americanhero1]

SIOUX FALLS, S.D. – Oil prices jumped above $53 a barrel Monday with Wall Street on news that the U.S. government will bail out Citigroup.

Light, sweet crude for January delivery rose nearly 6 percent, or $2.94, to $52.87 a barrel on the New York Mercantile Exchange.

Phil Flynn, an analyst at Alaron Trading Corp., said oil initially seemed like it was heading downward, dropping to $48 overnight even amid talk about possible production cuts by OPEC.

News that the U.S. government will take a $20 billion stake in Citigroup and guarantee hundreds of billions of dollars in risky assets gave both the stock market and oil market a boost, but Flynn said it's likely a short-term bump and he doesn't think investors are betting that the market has hit bottom.

"What we've seen in the past on these bailouts is it does give oil a boost for a while and energy a boost for a while," he said. "But as time goes on, that stimulus sort of wears off and then we go back to focusing on supply and demand."

The Dow Jones industrial average rose 300 points Monday morning.

Oil futures have followed stock markets recently, using equities as a proxy for economic outlook and investor sentiment. Traders are also expressing confidence in President-elect Barack Obama's emerging economic team.

Obama plans to name New York Federal Reserve Bank President Timothy Geithner as treasury secretary, Lawrence Summers as director of the National Economic Council and New Mexico Gov. Bill Richardson as commerce secretary. Obama will be sworn in on January 20.

"The lack of clarity as to who exactly is in charge of steering the U.S. economy is really hurting the equity markets," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "So putting together the new team gives a bit of a reassurance to the market, even if Obama isn't president yet."

Gas prices continued to drop overnight, with the national average price for regular dropping about 2 cents to $1.908 a gallon, according to according to auto club AAA, the Oil Price Information Service and Wright Express. That is more than 80 cents gallon below what it was a month ago and more than $2 below where it was in July when prices peaked at $4.11 per gallon.

Investors are looking for signs the Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, may reduce output quotas. Venezuelan Oil Minister Rafael Ramirez said Sunday that OPEC should cut oil production by 1 million barrels per day at an informal meeting Nov. 29 meeting in Cairo.

The group, which cut output by 1.5 million barrels a day last month, will hold its next official meeting on Dec. 17.

"It's still a big question mark whether OPEC will make an additional cut at the Cairo meeting," Shum said. "Chances are better for a cut at the December meeting. Talk of a cut is providing some support for prices."

Analyst Olivier Jakob of Petromatrix in Switzerland agreed, saying that only the timing of the new OPEC output reduction was uncertain, not the cut itself.

"We have the feeling that OPEC is keeping all its options not really as to whether they will cut further but as to when they will announce it," Jakob said in a market report.

In other Nymex trading, gasoline futures rose 6.97 cents to $1.134 a gallon. Heating oil rose 8 cents to $1.78 a gallon while natural gas for December delivery jumped 22 cents to $6.70 per 1,000 cubic feet.

In London, January Brent crude rose $3.30 to $52.49 on the ICE Futures exchange.
http://news.yahoo.com/s/ap/20081124/ap_on_bi_ge/oil_prices

[Lewinsky Stinks, Dr. Brennan Rocks]

See, Muman? This is more proof that Wall Street is 99% psychological, and 1% cold, hard fact (supply and demand).

The stock market is a joke, and why it continues to exist even after causing one severe worldwide depression, and numerous smaller ones, is not something I can answer.

PS: Oil is still climbing as we speak; the latest from Yahoo is that it is up to $55/barrel.

[Dr. Dan]

See, Muman? This is more proof that Wall Street is 99% psychological, and 1% cold, hard fact (supply and demand).

The stock market is a joke, and why it continues to exist even after causing one severe worldwide depression, and numerous smaller ones, is not something I can answer.

PS: Oil is still climbing as we speak; the latest from Yahoo is that it is up to $55/barrel.

you should see what options and shorts do..here you don't even buy the stock but do nothing more than essentially predect if the stock will go up or down. that is what drives the market. It is tax free, but also a huge risk of losing everything. 

As far as the stock market is concerned..sure..it'll go up today...tmorrow and next week it will go right back down to below 7000 points until the next rescue...

[briann]

See, Muman? This is more proof that Wall Street is 99% psychological, and 1% cold, hard fact (supply and demand).

The stock market is a joke, and why it continues to exist even after causing one severe worldwide depression, and numerous smaller ones, is not something I can answer.

CF you have no idea what you are talking about.   If every country dropped the stock market (IE secondary markets for securities)... every country would return to the dark ages.

Without a place to readily sell a stock....  no one would invest significant money in the issuance of stocks or bonds in the first place.... and corporations would have no way of raising capital.... and the lack of capital would turn us into North Korea.

Just because something has psychology in it.. doesn't mean you should abandon it.  What would you replace it with?  Should we abandon Corporations?  If not... how would corporations raise their money?  If we do abandon corporations... how will businesses in general raise money?

[briann]

See, Muman? This is more proof that Wall Street is 99% psychological, and 1% cold, hard fact (supply and demand).

The stock market is a joke, and why it continues to exist even after causing one severe worldwide depression, and numerous smaller ones, is not something I can answer.

PS: Oil is still climbing as we speak; the latest from Yahoo is that it is up to $55/barrel.

you should see what options and shorts do..here you don't even buy the stock but do nothing more than essentially predect if the stock will go up or down. that is what drives the market. It is tax free, but also a huge risk of losing everything. 

As far as the stock market is concerned..sure..it'll go up today...tmorrow and next week it will go right back down to below 7000 points until the next rescue...

Yes, you are probably right.

By the way... I dont think we need to follow the market too carefully until January.  That is when its movements are going to be much more significant.  If its stays in the 8000's from now till then... or even goes into the 9000's... no worries.

[Lewinsky Stinks, Dr. Brennan Rocks]

CF you have no idea what you are talking about.   If every country dropped the stock market (IE secondary markets for securities)... every country would return to the dark ages.

Without a place to readily sell a stock....  no one would invest significant money in the issuance of stocks or bonds in the first place.... and corporations would have no way of raising capital.... and the lack of capital would turn us into North Korea.

Just because something has psychology in it.. doesn't mean you should abandon it.  What would you replace it with?  Should we abandon Corporations?  If not... how would corporations raise their money?  If we do abandon corporations... how will businesses in general raise money?
It might be true that a speculation-based economy has increased the standard of living for us (but mostly those who run corporations), but how can an institution whose operating principles more often than not are based out of thin air be defended?

How many millions of people around the world starved in the '20s and '30s because of an epidemic of fear and panic among a handful of robber barons in a stuffy office building? What happened three years ago when housing prices, based on imaginary principles, went up to five times market value? Are we reaping the benefits now?

Regardless of the absolute-standard-of-living cut it might theoretically entail, I think the whole world would be better off with a gambling and borrowing-free economy.

[briann]

CF you have no idea what you are talking about.   If every country dropped the stock market (IE secondary markets for securities)... every country would return to the dark ages.

Without a place to readily sell a stock....  no one would invest significant money in the issuance of stocks or bonds in the first place.... and corporations would have no way of raising capital.... and the lack of capital would turn us into North Korea.

Just because something has psychology in it.. doesn't mean you should abandon it.  What would you replace it with?  Should we abandon Corporations?  If not... how would corporations raise their money?  If we do abandon corporations... how will businesses in general raise money?
It might be true that a speculation-based economy has increased the standard of living for us (but mostly those who run corporations), but how can an institution whose operating principles more often than not are based out of thin air be defended?

How many millions of people around the world starved in the '20s and '30s because of an epidemic of fear and panic among a handful of robber barons in a stuffy office building? What happened three years ago when housing prices, based on imaginary principles, went up to five times market value? Are we reaping the benefits now?

Regardless of the absolute-standard-of-living cut it might theoretically entail, I think the whole world would be better off with a gambling and borrowing-free economy.

You are stating 'communism 101'.  And what I always say about communism is.....

Yes.... we would be in a more equal world without without free commerce/borrowing/free access to buy and sell... and we would not experience these economic cycles..... but our lives would all equally suck.  You need proof.... North Korea versus South Korea.... East Germany vs. West Germany... etc etc.

People are stuffing themselves in suitcases rather than living under a world that is 'equal' and doesn't allow free flow of commerce.

the problem with capitalism will ALWAYS be.... that we have economic cycles... and yes.. it sucks.  And you are right North Korea doesnt have these cycles.  But they are in a perpetual state of horror and suffering.

[Zelhar]

I think that the latest rally is entirely justified by the bail-out. Unlike AIG and BSC, the Citi bail-out is very favorable to the stock holders.

[muman613]

<snip>
the problem with capitalism will ALWAYS be.... that we have economic cycles... and yes.. it sucks.  And you are right North Korea doesnt have these cycles.  But they are in a perpetual state of horror and suffering.

I agree with Briann on this one... Capitalism is not perfect but it is superior to Communism in many respects. It is true that capitalism goes through up and down cycles {I have witnessed at least 4 such cycles in my life}. But in the long run our Capitalistic system has grown year after year bringing about a very good standard of living for America. I would not trade this in for communism for anything...

[briann]

I think that the latest rally is entirely justified by the bail-out. Unlike AIG and BSC, the Citi bail-out is very favorable to the stock holders.

I'm starting to think that pretty soon... our own government is gonna need a bailout.