Volatility Measures suggests Spikes in NG while Steadiness in Crude Oil:

Crude oil volatility fell to the lowest level in almost three years. The reasons are stated such as brimming stockpiles and rising OPEC investment in production capacity which expectedly eased concern of shortages. This measure of Volatile in crude oil is oil’s 50-day historic volatility. It has declined to 23 percent presently. This is the lowest mark since July 2007. This measure peaked to 108 percent in the beginning of 2009 when the crude oil prices tanked due to subprime led crisis and Lehman brothers fall. Recently the OPEC countries (Organization of Petroleum Exporting Countries) said they are planning 140 oil projects over the next five years and that its 6 million barrels a da of unused production is enough to meet demand.

If we look at the inventory situation then the US crude stock pile rose to 356 million barrel recently which is biggest since June. Even the inventories held on ships are climbing. However recently the crude oil prices are making fresh yr tops and not receding as should be suggested by the above facts. While it is also a fact that declining crude oil volatility means lower margins from trading operations for global oil giants.

The crude toped all-time high of 147 in July 2008 and made low of $32 in December 2008.

However we at MEGHA INVESTMENTS AND RESEARCH believe that the prices of crude oil should continue to strengthen further despite declining VIX in crude oil however the trade range is likely to remain narrow. The arguments of newspapers and reporters are self-appraising and oversimplifications. There is no proof that the Greece crisis bring crude oil price down. The dollar is strengthen against euro then why the gold prices continue to remain firm? Anyway, reporters have to report and to report (they) have to over simplify, correlate, show reasons, cause-effect relationships, explanations and so on.

The decline in volatile is many times an occurrence of increased liquidity and trading volume which is common across all asset classes. But however we don’t completely agree with this maxim. Many times we have witnessed rise in volatility with rising volumes. The new highs and lows are also typically recorded with record volumes.

While looking at the natural gas, the volatility is rising. The measure increased to 41.7 percent which was at 35.3 percent in march which was 8 month low. 

CRUDE OIL AND PICK THEORY

EXCLUSIVE CRUDE OIL REPORT

Yes, Crude Oil Prices can touch to New Highs and Beyond...

“ACCORDING TO ‘PICK OIL THEORY’ THE PRICES OF CRUDE OIL MAY TOUCH $300 PER BARREL”

BELL CURVE:

The production of crude oil normally follows  the shape of a ‘bell-curve’ in which we can say it to be peak production when on the graph this curve comes in the centre top. At this level the production has been peaked i.e. this is the time and quantum of maximum production and from here on the production decreases. (see figure). Paring some exceptions this phenomena is true for a single oil well, a whole oil-field, a country and the whole wordl.

“Peak-Oil doesn’t mean we will become ‘oil-less’, but is surely means we become ‘cheap oil-less”.

The pick oil theory which was made by American Geologist King Herbert, is also known as Herbert Pick Theory. According to this theory’s conclusions, due to declining exploration and sharply decreasing production ; we may see tremendous blast and rocket pace rise in prices of fossil fuels, mainly crude oil. This Pick Oil theory works on the basis of principle based on long-term production and declining reserve rate of fossil energy sources such as coal, crude oil, natural gas etc.

We will try to evaluate this theory through various facts, figures, logics and arguments in this special ‘$300 CRUDE OIL SPECIAL REPORT’.

-       There are many reasons behind the strengthening fears of decrease in the reserves/availability of traditional sources of energy such as fossil fuels (like crude oil etc.)  such as,

o   The technology relating to acquisition and analysis of geological information, is improving day by day.