Swings in commodity prices are often exaggerated in both directions, says Eric Roseman. And that’s exactly what we have seen with crude oil prices this year. But Eric says most of the destruction in demand is now priced in. But long-term supply will still be tight. That’s why we should be near the bottom of the oil cycle, with potentially massive gains for investors that by now.

This from Sovereign Society:

The “Elastic Rubber Band” theory is a popular investment term to describe wide price swings in asset markets. Market moves are usually exaggerated on both sides of the trade and this year’s volatility in oil prices is a testament to that swing.

In a bull market, trends tend to rise far above anyone’s boldest predictions while the same is true when a major reversal lends to big price declines. Could anyone have possibly predicted crude oil would be

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Today, the big news that could move commodities is not in China or the Middle East -- it's right here at home. US banks are failing and the Federal Government is going to bail out Fannie Mae and Freddie Mac. I think this has big implications for the US dollar, and not in a good way. I'll be writing more about this in Wednesday's Money and Markets. For now, here is some news of interest ... Fannie, Freddie Too Critical to Fail, Lawmakers Say A government takeover of one or both companies is among several options that have been considered by White House officials, according to a person familiar with the discussions who spoke on condition of anonymity. Senior Bush administration officials are considering placing either or both firms in a conservatorship if their problems get worse, the person said. Paulson Puts Treasury Behind Fannie Mae, Freddie Mac in Bid to Calm Market Paulson, speaking on the steps of the Treasury facing the White ...

Chrysler Building Sold to Abu Dhabi; 2,500 Employees Depart From Northwest; Icici Bank on the Prowl; OPEC Revenue to Jump 86%; Steve & Barry’s Bankruptcy; Bear Market S&P; Busch to Shareholders: Just Say No; Bank of America Chief Sees Mid-Year Recovery New York’s Chrysler Building, the an iconic piece of the city’s skyline and the world’s tallest building until 1931, was bought by an Abu Dhabi sovereign wealth fund Tuesday. The Abu Dhabi Investment Council paid Abu Dhabi Investment Council acquired the Chrysler Building from a fund managed by Prudential Financial Inc. (PRU). Northwest Airlines Corp. (NWA) said yesterday (Wednesday) that it will cut 2,500 jobs because of high oil prices, and start charging $15 to check a single piece of luggage and as much as $100 to redeem a frequent-flier award ticket, the Associated Press reported. The ...

Just a few days ago, OPEC President Chakib Khelil told a French television station the awful truth that U.S. consumers don't want to hear. "I foresee prices probably between $150 and $170 this summer," Khelil said. At the same time, Libya announced it may cut production because the market is "oversupplied." Oil Minister Shokri Ghanem said: "We don't see any need for more oil. There is plenty of oil in the market." Libya pumps about 1.71 million barrels per day (bpd) of oil, out of total OPEC output of 32.12 million bpd. That means Libya could easily take away the 300,000 barrels in new production that the Saudis promised just a week ago. The Libyans, along with the rest of OPEC, want prices where they are now ... or higher. Why? Because they want ...

The talking heads on CNBC are wondering why oil prices keep going higher. Well, a picture is worth a thousand words, so here's why ...Source: Netoilexports.blogspot.comYou can see exports are down year over year while demand keeps rising. And that's why the Saudi agreement to pump more oil isn't calming the markets -- it's too little too late. Saudi Arabia, United Arab Emirates, Iran, Kuwait, Iraq and Qatar curbed their output by 544,000 barrels a day last year. At the same time, their domestic demand increased by 318,000 barrels a day. So, their net exports dropped by 862,000 barrels.

It would seem that the proposed rise in Saudi production of 200,000 barrels from June to July, on top of the 300,000 bpd rise in May, is not enough to even make up for last year's cut in OPEC exports.

Here is some other news you can use ...

Analyst: Air fares

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One thing that the world has forgotten for the most part, is that gold is money. It has been parroted around for three generations as a commodity only, with little industrial use or demand, and no value as a currency.

Humans have this interesting tendency to forget history, even though through all of time it consistently repeats itself.

The cycle I am speaking of is the one where societies and economies cycle back and forth between paper fiat money backed by nothing but a governments promise that it has value, and currency that is backed by gold and silver.

This is not new, and in my opinion will happen again, as it always has, for thousands of years.

For a while now I have been going on about how the Chinese, OPEC, and other nations are sitting on trillions of USD in their reserves are not going to simply sit on it and watch

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Source: MarketWatch  05/30/2008
With oil prices soaring in recent months, the primary focus in the investment community has been on the potential ceiling, which some have put at $150 or $200 per barrel, possibly attainable within a year or two.

Certainly, a political disruption of oil supplies — civil war in Nigeria, major fighting in southern Iraq, attacks on Caspian pipelines — could occur and would send prices sharply higher, but overall there is a greater likelihood that prices will drop in the next few years, and perhaps sharply.

Oil is a mean-reverting commodity. Since the industry’s early days, price revolved around a mean of less than $25 a barrel for over a century, despite world wars, the market monopoly of Standard Oil, the cartelization by the Texas Railroad Commission and finally the U.S. import quotas in the 1950s and 1960s. Only OPEC was able to raise it above those levels.
Others have …

Man, I just step out for one minute and you kids send the price of oil up to $134 per barrel. This is why we can't have nice things!I've found some interesting stories on the subject. Robert Scheer's story "Paying for War at the Pump," is a must-read.Mish Shedlock has a great opinion piece on the latest slapstick plan from Congress -- sue OPEC!Meanwhile, Big Oil says: "Don't look at us!"And a couple of farmers have had enough. They're switching back to mule power!

CRUDE OIL

And yet prices keep going higher …

Angola is scheduled to start shipping a new blend of crude oil in July, boosting production by about 90,000 barrels a day. Iraqi oil production rose to more than 2.5 million barrels a day last week, the highest this year. Saudi Arabia, the world’s biggest oil exporter, has said it will raise daily output by 300,000 barrels a day to 9.45 million barrels next month after requests from customers.

Can’t Find Enough Oil Is Lament of BP, Exxon, Shell With Record Investment Never have so many oil and gas companies spent so much to produce so little.

Saudi Arabia’s Oil Production Increase Is Unjustified, OPEC Members Say Saudi Arabia’s decision to increase oil output

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