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Stock market driving oil prices

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ClydeCrashKop

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I had a revelation tonight and had to share it.
On the national news tonight, 7-14-06 during the stock market coverage they said that the price of oil topped $78.00 per barrel for a short time. They were speculating about what might happen because of Israel bombing Lebanon. It was not supply and demand or the oil producing countries or the cartel or our oil companies. The price of oil is driven by the stock market! So the price we pay for gas and everything else is going up because a few greedy SOBs are playing and manipulating the stock market. Is there anything we can do about this? Would it help to put the blame where it belongs?!!!!
It’s probably a futile attempt and they have no shame, but please forward this to anyone you think could do some good.
 
I'm sorry but you are wrong about the connection of the stock market and the price of oil or any other commodity for that matter. There are completely separate markets where futures contracts are traded. There is also a spot market where oil is traded. If you knew the first thing about economics and markets you would not have made such an utterly ignorant and rediculous statement. The price discovery mechanism of thousands of agents each working in their own self interest is the fairest and most efficient mechanism that there is. The alternative is a centrally planned economy with price controls. It's called communism and I think that it has been consigned to the dustbin of history.

If you don't like the price stop driving, drive a small fuel efficient car; go long December Crude if you think the price will keep going up. What's that I hear you think the price might collapse between now and December...well then you need to short December Crude. No stomach for risk taking? Too bad.
 
Papabravo said:

GO USA!!!!
I am amazed at what the US nationals will swallow :rolleyes:
Anyway while the increase in Crude is NOT downot greedy oil-company exec's
it is stock-market related.

Simply put supply & demand.
Demand has not changed, supply has alot of headroom as well yet the price has sky-rocketed

This is only downto the stockmarket and what people are willing to buy at. Basically Israel & Lebanon are NOT oil producing nations and this little spat isn't effecting production or shipping, all that has happened is quite a few nervous traders has bought up alot of oil AND that has pushed the price up

https://news.bbc.co.uk/1/hi/business/5178866.stm
 
Oil, quite simply my friend, is not traded on the stock market. Shares of oil companies are traded there, but their prices are affected by many things including dividends and earnings. I guess I'm amazed at what people in the UK will swallow as well.

One other point is that the speculative traders don't buy oil, they buy contracts for future delivery. It is estimated that less than 3% of the future contracts are ever held for deilvery. Expand your horizons and look a little deeper than the superficial claims that you've made.
 
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The biggest problem is with the booming industry in China, the world demand will go up from around 80,000,000 barrels a day to around 130,000,000 barrels a day estimated. so oil will never become cheap again as it used to be.
Prices in the nest 5 to 10 years will most likely double to 150 $US a barrel.
We live in the plastic age unfortunately and a lot of oil is also needed for all the plastics and synthetics.
If the oil peak is reached there is an expected downturn in daily production which will add to further oil price increases.
Countries like Brazil and Argentinia at least grow sugarcanes and make their own ethanol to keep the car fleet going. and less dependency on oil imports.
 
Papabravo is correct with his information. It's the paniced few in the oil futures that are rocking the boat when it could be floating much steadier. US consumers also need to realize that the associated fuel/transportation taxes don't help either and they add quite a bit to the total cost/gal. Ironically, we embrace capitalism but when companies become giants in their field (WalMart, Exxon, Mobile, etc.) folks yell out "foul" and demand federal involvement/investigations to knock 'em down to a level that we deem appropriate. :confused:
 
The other piece of market wisdom to keep in mind is:
"Bulls make money, and bears make money, but pigs get slaughtered!"
's not original with me but it seems somehow appropriate.
 
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