So is there anyone else that still thinks crude prices reflected supply and demand?
- Thread starter halik
- Start date
- Aug 23, 2003
- 25,375
- 142
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It's an election year. Every little psychological boost helps, even if it's giving the American people cheaper gas for a few months.
Remember that the oil companies have a whole f*****g lot on the line this November as well. Exxon has been buying obscene amounts of ad time on networks to advertise their "clean" and "helpful" image.
They have to fight nationwide to keep the people friendly to their business practices in power, or they risk losing billions in subsidies and tax cuts over the next four years.
Remember that the oil companies have a whole f*****g lot on the line this November as well. Exxon has been buying obscene amounts of ad time on networks to advertise their "clean" and "helpful" image.
They have to fight nationwide to keep the people friendly to their business practices in power, or they risk losing billions in subsidies and tax cuts over the next four years.
I dont believe it was 100% the reason. But it certainly played a part. The tumble started on news of increased supply due to lower demand.
they reflected supply and demand, unfortunately a large amount of the demand was not for typical uses of oil, and instead was based on people holding it with the expectation that it would be worth more in the future. And then they lost their shirts, and much lulz where had.
Capt Caveman
Lifer
- Jan 30, 2005
- 34,547
- 651
- 126
"Those evil oil companies... jacking up the price of oil."
"Those evil oil companies... jacking down the price of oil."
Go figure. Short of going out of business, there is nothing energy companies can do to make you kooks happy.
"Those evil oil companies... jacking down the price of oil."
Go figure. Short of going out of business, there is nothing energy companies can do to make you kooks happy.
Still a commodity, still traded on who is willing to pay vs those willing to sell
Summer driving season is over
High prices have reduced demand, prices fall
Just like every year for the last 50 if you bothered to look at a graph, just this yr the fall was a little more precipitus.
Summer driving season is over
High prices have reduced demand, prices fall
Just like every year for the last 50 if you bothered to look at a graph, just this yr the fall was a little more precipitus.
Perhaps a more accurate statement would be that projected decreased demand from an Europe in recession and an Asia that is now recognized as slowing (Asia apparently exports a lot of their stuff to Europe), in addition to a multitude of other factors, accounts for the popping of the speculative bubble (fuel for the speculative bubble was / perhaps still is the compelling narrative that demand from emerging markets would cause total global demand to exceed total global supply in the next couple years). See graph on page 6 here.
A recent Oakmark Shareholder Letter points out that other commodities that are not traded on the futures market have also increased dramatically:
"...commodities that have no futures markets, such as iron ore, metallurgical coal, and certain agricultural products, have seen their prices go up as much, if not more, than those commodities that do trade on a futures market. This is because the demand for these commodities has far outstripped the supply, resulting in higher prices. As has been obvious for more than two years now, the supply-demand picture for oil has roughly been in balance, which means it assumed no growth in the world economy. However, to match the growth in demand that is actually occurring, the world needs to produce a few million more barrels of oil a day, which is not possible at present. Even if demand in the developed world drops substantially, according to a recent report from the International Energy Agency in Paris that drop will be offset by an increase in demand of 3.7% a year from 2008 to 2013. Indeed, that same report indicated that China, with continued IMF predictions of double-digit economic growth for the foreseeable future, will sop up roughly a third of the demand increase in that same 2008 to 2013 period"
A recent Oakmark Shareholder Letter points out that other commodities that are not traded on the futures market have also increased dramatically:
"...commodities that have no futures markets, such as iron ore, metallurgical coal, and certain agricultural products, have seen their prices go up as much, if not more, than those commodities that do trade on a futures market. This is because the demand for these commodities has far outstripped the supply, resulting in higher prices. As has been obvious for more than two years now, the supply-demand picture for oil has roughly been in balance, which means it assumed no growth in the world economy. However, to match the growth in demand that is actually occurring, the world needs to produce a few million more barrels of oil a day, which is not possible at present. Even if demand in the developed world drops substantially, according to a recent report from the International Energy Agency in Paris that drop will be offset by an increase in demand of 3.7% a year from 2008 to 2013. Indeed, that same report indicated that China, with continued IMF predictions of double-digit economic growth for the foreseeable future, will sop up roughly a third of the demand increase in that same 2008 to 2013 period"
JulesMaximus
No Lifer
- Jul 3, 2003
- 74,459
- 854
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oil prices don't just reflect supply & demand in the stock market.
they also reflect supply & demand in investment markets. people invested
in oil futures because, for a while, they thought they could get a better
return there.
they also reflect supply & demand in investment markets. people invested
in oil futures because, for a while, they thought they could get a better
return there.
blackangst1
Lifer
- Feb 23, 2005
- 22,914
- 2,359
- 126
Why? Straight from the mouths of liberals (Lord only knows how this idiot was ever elected, but she was).
http://www.youtube.com/watch?v=KN6s1KVFBNg
http://www.cnbc.com/id/15840232?video=843616645&play=1
(Gartman, near end of this clip, says there are some large endowment and pension funds who thought commodities are now an asset class and deployed 15 - 30% of their capital into commodies during the spring of this year!)
(Gartman, near end of this clip, says there are some large endowment and pension funds who thought commodities are now an asset class and deployed 15 - 30% of their capital into commodies during the spring of this year!)
StageLeft
No Lifer
- Sep 29, 2000
- 70,150
- 5
- 0
Lawls, would you say that if it dropped to $50?
If we go this far, obviously bubbles are impossible because they all reprsent an investment demand/supply relationship. The supposition was that the demand was unreasonable and not in line with reality, hence an unnatural bump in value.
You made the thread and phrased it as a callout. Maybe you should look up the numbers before sticking your neck out. Demand had been falling considerably, at least in the US.
The price didn't drop because demand moved, the demand dropped when the price kept going up.
There has been 3 companies destroyed by the market falling, eliminating a huge portion of the trading activity. another hedge fund exited the commodities market yesterday after getting murdered.
TB Picken's own hedge fund was sustained huge losses because of falling commodities.
Everybody knows what happened, nobody wants to admit it.
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