this just in - rise in price of oil has nothing to do with speculators

Ummm...

Three main things affect the price of oil:

1) Supply and demand.

2) Speculators.

3) Health of the dollar.

To say that speculators have nothing to do with it is ridiculous. There's a certain breed of investor who always goes where the current hot thing is (getting in after the bull run as started and getting out after it has cooled off, thus not making as much as they hoped they would). When the DOW started to fall off the cliff back in October 2007, speculators were heading to gold and oil in droves. Now that the DOW has shown some signs of life and gold has dropped and oil is dropping, many find it is time to head back to the DOW. Too late though to make the most of the gains. Had you continued to put money in when the DOW dropped below 11,000, then you'd be poised for some big gains going forward. Dollar cost averaging is the key.

Flagpole, I would take it a step further and say the primary driver of your #2 is your #1, it's a virtual sub-set.

C&C Music Factory... wrote:

Flagpole, I would take it a step further and say the primary driver of your #2 is your #1, it's a virtual sub-set.

Not disagreeing there. Just making the point that speculators can't be removed from the equation.

oil blowout today.

Oil 115.20 -4.82 -4.02%

maybe sub 110 by the end of next week.

for the moment, the dollar is up.

i would like to point out though, that i think that in general, things are not and will continue to not be good. as soon as our economy and other economies start to pick up again - we will be back where we were, especially with regards to other commodities. with this dip, especially in precious metals - gold, silver, platinum, palladium - i will be a buyer. given the government's spending habits and putting you into debt - both parties, thank you very much - the dollar can really do nothing but go down in value. it may slow - but its buying power will continue to be eroded.

3:30 pm : Heading into the final stretch the major indices continue sporting attractive gains.

Oil has shed 4.3% on the session, bringing futures prices down below $115 per barrel. The dollar continues showing strength; the dollar index is up 1.7%

I said a while back that I thought we'd see oil under $100 a barrel before we'd see it over $200 and that we'd see gas under $3 before it was over $5. I hope I'm right. We're getting there, I hope this trend continues (although let's pray the dollar doesn't get weakened much further).

show yourself neb. admit you were a fool. do it do it do it.

At least twice as many people on the bus during the morning commute now compared to a couple months ago.

Oil was at $25 only 5 years ago. A 400% increase in 5 years is not normal.

Demand was at 57 million barrels a day in 1970, 80mbd in 2004.

The problem is that the capacity is right in step with demand now. In previous decades the capacity has been far ahead of demand. There's oil in the ground. OPEC and other countries (US) need to start drilling it. Also more refineries need to be built.

Alan

This is the first parapraph on the Hirsch Report - a govn't report published in 2005 on peak oil. Notice the sentence about volatility in prices.

As much as all of you think you know where oil prices are headed next, you don't. But one thing that is undeniable is that there has been a ton of price volatility - both during the run-up to $145/barrel and during the past month as well when the price has been declining in general.

The differential btwn supply and demand is so tight that the market reacts wildely to every supply report, news of tension in oil exporting countries, news of demand destruction, etc.

We've got a bunch of people cheering for the price of oil to go lower so that the US can continue its unsustainable way of living. Gas staying at $4+ is a good thing for the long term health of our economy. History has shown that people quickly forget about high prices and go back to wasteful habits once the prices come down. Last thing we need now is for gas to drop back down to $3/gallon or less. We need the price to stay high so that people's driving habits permanently change, and so that robust public transportation systems are built out.

First paragraph of the Hirsch Report from early 2005:

"The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking."

I like the excuse "I didn't say it would never go down, just that it wouldn't be much cheaper like before" Well no shit eh, that tends to happen with things ha Coke will NEVER again be at 10 cents a bottle!!!

There's oil in the ground but the world (including OPEC countries) is at its limit in terms of how fast the oil can come out of the ground. OPEC is incapable of increasing oil production in any meaningful way or they would have been doing it during the past two years when the demand was there and prices were skyrocketing.

Runningart2004 wrote:

At least twice as many people on the bus during the morning commute now compared to a couple months ago.

Oil was at $25 only 5 years ago. A 400% increase in 5 years is not normal.

Demand was at 57 million barrels a day in 1970, 80mbd in 2004.

The problem is that the capacity is right in step with demand now. In previous decades the capacity has been far ahead of demand. There's oil in the ground. OPEC and other countries (US) need to start drilling it. Also more refineries need to be built.

Alan

Everyday I learn more and more about how ignorant people are. Um....there's a difference btwn normal inflation (i.e. the price of coke rising 2 or 3% a year, so yeah it won't stay at $0.10 like it was in 1960) and the price of oil going from a general range of $15-$25 a barrel for 20 years and then running up to $145 a barrel in 6 years. Even if the price goes back down to $80 a barrel, that's still much higher than would have been expected under a normal rate of inflation.Think before you write dude.

atrrunner wrote:

I like the excuse "I didn't say it would never go down, just that it wouldn't be much cheaper like before" Well no shit eh, that tends to happen with things ha Coke will NEVER again be at 10 cents a bottle!!!

oh where is NEB when we need him?

Oil's about to slip back under $100/barrel and I want him to tell me that the price at $147/barrel had nothing to do with speculation in the market.

breaking news wrote:

oh where is NEB when we need him?

Oil's about to slip back under $100/barrel and I want him to tell me that the price at $147/barrel had nothing to do with speculation in the market.

I'm right here.

You would only be right if demand and supply were exactly the same as they were on the day that oil was $147. If the only difference between today and that day was that a bunch of investors decided to drop oil - then you would be right.

But, things are very different - Americans have showed they can actually put down the crack pipe (gas pump) for a full driving season. The drop in demand was so novel that a new word was invented - the "staycation".

The world economy is grinding to a halt. I don't think people understand how massive this whole fannie and freddie thing is - if the fed had let them go under many experts say credit (the life blood of the modern world economy) would have basically stopped.

Of course investment cycles mean that there is a slight lag between changes in demand/supply and peaks/valleys - so that prices might go a little higher on the peak and a little lower on the valley than they "should". But, that doesn't mean that the price was totally unhinged from demand/supply. It wasn't and it isn't.

Actually, if the Fed had let Fannie and Freddie go under, we might actually be able to start the economic recovery process. When a company makes bad investment decision after bad investment decision, that company normally fails, just as it should. That's how the market works. But in the case of Fannie and Freddie, the government got involved and helped prop up a company that should have failed a long time ago. Sure, letting them fail would cause serious financial repercussions. That's obvious. But keeping them alive is only delaying the inevitable and ensuring that the fallout will be even more severe when reality finally does have its way.

The world economy NEEDS credit to dry up. Such loose credit is responsible for the MASSIVE overconsumption that is so prevalent in the US (and also many other countries). Loose credit is responsible for the whole mess. If we would simply let these entities fail and let the market determine the cost of credit (instead of the Fed) then we would see a much more sensible level of consumption and a much more sensible growth pattern.

Read it, weep, admit your stupidity and then SHUT UP Neb!

Neb, while I don't agree with you, I give you credit for coming forward after oil prices have declined drastically.

I'm not at all in favor of much government regulation of business, but when speculators can drive the price of oil up so quickly, their actions would seem to be contrary to the public interest. Perhaps someone more knowledgeable than I could comment on the downside of curbing oil speculation.

You are delusional... still.

everyone in the market is a speculator. they want to buy low and sell high. so, let's just end this fake debate. if the question is whether scarcity caused the dramatic price rise, the answer is obviously no, since there was no dramatic increase in demand overnight, such that would warrant a doubling of oil prices--and we all know that demand has risen at no such rate--but if the question is whether predictions of scarcity drove the price increase, then the answer is obviously yes. demand will continue to rise worldwide, with some small hiccups from recessions, and supply will rise at a slower rate before falling.