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Oil Prices Today
Old 07-15-2008, 12:15 PM   #1
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Oil Prices Today

My colleagues here and elsewhere have assured me oil prices move only on supply and demand and not on speculation. I note, however, that we are seeing a curious thing. Oil is down this morning about $7 a barrel as hedge funds unload their positions to raise cash.

How odd. Demand must be dropping rapidly world wide somehow in a coincidence with hedge fund selling. Since we know that hedge fund speculation can't raise the price of oil, it must be that oil prices are only affected in the downward direction by speculators selling.

So, the answer on speculation and the price of oil has finally been settled. Speculators only affect the price of oil when they sell, never when they buy.

Simple really.

boont
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Old 07-15-2008, 01:40 PM   #2
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i've read that oil prices don't run with demand, but there is a several year lag. oil demand has been dropping a little in the US over the last several years so we may finally see prices fall.

production is still a problem since the easy oil has already been recovered. even saudi arabia's new oil field uses a lot of cool technology to get oil out of the ground that was mostly impossible several decades ago
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Old 07-15-2008, 01:46 PM   #3
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i've read that oil prices don't run with demand, but there is a several year lag. oil demand has been dropping a little in the US over the last several years so we may finally see prices fall.
But we need to look at world consumption for prices to actually fall based on supply/demand. If China's demand is increasing faster in barrels then our demand is decreasing, then we'll still have a tight supply.
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Old 07-15-2008, 02:22 PM   #4
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china's stock market is crashing and their economy will probably soon follow. probably after the olympics
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Old 07-15-2008, 02:29 PM   #5
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So, the answer on speculation and the price of oil has finally been settled. Speculators only affect the price of oil when they sell, never when they buy.

Simple really.

boont
Isn't there another simple explanation? The markets are down, it is anticipated that will lower consumer spending, which will lower demand for oil and products made from oil, so supply/demand says prices drop.

No?

-ERD50
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Old 07-15-2008, 02:45 PM   #6
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Isn't there another simple explanation? The markets are down, it is anticipated that will lower consumer spending, which will lower demand for oil and products made from oil, so supply/demand says prices drop.

No?

-ERD50
If we could trick the Fed into acting normally, a 50bp raise in interest rates would chase a lot of speculators away........
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Old 07-15-2008, 02:51 PM   #7
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if oil does come crashing down like i finally think it will, inflationary pressures will moderate just as bernanke had predicted 6 months ago. and he may be seen as a genius.
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Old 07-15-2008, 02:52 PM   #8
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Not to bring in the soap box, but I wondered if oil would fall if the US acted like we might actually drill for oil offshore (as Bush acted yesterday), to stop us from proceeding.

I also filled up yesterday so that might also partly explain why prices would drop today--we'll see if the drop in oil is reflected at the Exxon.
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Old 07-15-2008, 02:57 PM   #9
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My colleagues here and elsewhere have assured me oil prices move only on supply and demand and not on speculation. I note, however, that we are seeing a curious thing. Oil is down this morning about $7 a barrel as hedge funds unload their positions to raise cash.

How odd. Demand must be dropping rapidly world wide somehow in a coincidence with hedge fund selling. Since we know that hedge fund speculation can't raise the price of oil, it must be that oil prices are only affected in the downward direction by speculators selling.

So, the answer on speculation and the price of oil has finally been settled. Speculators only affect the price of oil when they sell, never when they buy.

Simple really.

boont


You had read wrong.... speculators CAN affect the price of the FUTURES, because if there are a lot of people buying, the price goes up... but they can not affect the price of the SPOT, because you have to take deliver of the oil and do something with it...

So IF the people who actually USE oil thinks there is $60 over the real price of oil, then the spot would show that to be true AND they would not buy any futures.... but guess what, they do.... because it is not 'overpriced' per say...

All this is bunk if there is someone storing what they are buying, because that increases the 'demand'... or if someone is not producing like they say, because that affects the 'supply'...
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Old 07-15-2008, 05:17 PM   #10
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If we could trick the Fed into acting normally, a 50bp raise in interest rates would chase a lot of speculators away........
There are a lot of interventions that woud be better targeted to oil prices and only oil prices than this one would be.

Ha
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