Current Oil Price

Post by **adam2** » 08 Sep 2014, 11:15

I still find the fall in oil prices to be surprising.
Whilst there are indeed significant downward pressures, I would have expected that unrest in Ukraine and in the ME, and depletion would more than counterbalance these downward pressures.
This is clearly not the case.

snow hope · Post by **snow hope** » 08 Sep 2014, 12:56

Yes, hard to figure why it is falling.....

PS_RalphW · Post by **PS_RalphW** » 08 Sep 2014, 14:58

The global futures market is very bad at predicting the future price of oil.

Options to buy oil can be bought for any month for up to 5 or even 10 years in the future. In normal operation the future price is lower than the current (spot sale) price, because future demand has no lower bound, but on the up side, if the predicted sale price rises high enough, you can buy oil on the spot market and rent storage for it, putting an upper limit on the future price. relative to the spot price.

In practice the future price has predictive value for a few months in advance, except when it doesn't. Longer futures prices simply follow the short term trend.

I don't think most oil traders care much beyond the next quarter what the price of oil will be.

PS_RalphW · Post by **PS_RalphW** » 10 Sep 2014, 16:27

I think we just hit $98. I'm not great on conspiracy theories, but who will be hurt most by low prices?

Obviously the shareholders of US oil fracking companies, but also those oil export countries most dependent on dollar oil revenues, and at the moment that would be Russia.

There was much talk of the relative oil glut of the 1980s being designed to bankrupt the Soviets by killing their oil industry, could the US/SA allies be doing the same again?

I'm not going to offer odds, but if they were it is a very risky gamble.

biffvernon · Post by **biffvernon** » 10 Sep 2014, 22:21

Russia can now sell to China with no dollars involved.

Post by **kenneal - lagger** » 11 Sep 2014, 04:23

Russia can sell to anyone it wants in whatever currency it wants. All it has to do is turn off the gas for a week or so and the whole of Western Europe will be begging at the doors of the Kremlin for oil and gas in whatever currency the Russians want. The reaction, or rather the non reaction, to the Russian adventures in The Ukraine have shown that the Kremlin can do as it wants with no military consequences whatever. The sanctions will fall by the wayside as Russian oil and gas becomes essential for keeping the house warm this winter.

PS_RalphW · Post by **PS_RalphW** » 11 Sep 2014, 07:59

Russia has cut the gas supply to Poland because Poland was selling it on to Ukraine.

China could buy from Russia, but their demand is falling and why would they when they can get it from the west using their massive dollar reserves which are otherwise depreciating?

PS_RalphW · Post by **PS_RalphW** » 01 Oct 2014, 12:03

Brent below $95.

PS_RalphW · Post by **PS_RalphW** » 02 Oct 2014, 11:53

Nosedive today to below $92. That is a $23 drop in 3 months.

I can't help thinking we are starting to see a little Ebola panic spreading to the market.

If Ebola spreads in Dallas, NOBODY will want to fly. It will be financial crash, peak oil and overshoot tipping point all in one black swan.

Post by **adam2** » 02 Oct 2014, 13:50

PS_RalphW wrote:Nosedive today to below $92. That is a $23 drop in 3 months.

I can't help thinking we are starting to see a little Ebola panic spreading to the market.

If Ebola spreads in Dallas, NOBODY will want to fly. It will be financial crash, peak oil and overshoot tipping point all in one black swan.

Agree, markets expecting if not a total transport shutdown, at least a significant reduction in air transport, and possibly also restrictions on road transport.

biffvernon · Post by **biffvernon** » 04 Oct 2014, 08:14

$89.74 It's been a while since our WTI ticker was that low.

It must give investors in the tar sands something to scratch their heads over.

raspberry-blower · Post by **raspberry-blower** » 06 Oct 2014, 19:44

Today's pertinent question: Does Oil Have a Future?

Ilargi wrote:Of course I’ve been following oil prices too, on top of all the other topics. The economics of oil has become amusing, in that it raises a lot of questions. First of all, obviously, why are prices falling as much as they are? In the financial world, people are prone to thinking that the price of everything moves up or down due to what goes on in the markets. That traders decide what shines and what doesn’t, be it stocks, bonds or commodities. Me, I haven’t thought that for a long time.

If central banks, the Fed first and foremost, buy bonds and stocks in order to manipulate their prices, and they ‘set’ interest rates as well, I just don’t see any reason to presume they would leave gold and silver and oil alone. That still leaves plenty of questions though. Apparently, someone up there wants low oil prices the same way they want low interest rates. But why, and why now?

vtsnowedin · Post by **vtsnowedin** » 06 Oct 2014, 20:15

raspberry-blower wrote:Today's pertinent question: Does Oil Have a Future?

Most certainly. The back side of the production curve will be even more interesting then the upward side has been. The only things that could preclude oil having a future would be the discovery of a good cost effective substitute making oil obsolete or the reduction of the human population to essentially zero hence removing the demand. Not much chance of the former and lets hope to avoid the latter.

RenewableCandy · Post by **RenewableCandy** » 06 Oct 2014, 20:15

If it's reduced travel because of fear of Ebola...just goes to show how much travel is discretionary, doesn't it?

vtsnowedin · Post by **vtsnowedin** » 06 Oct 2014, 20:23

RenewableCandy wrote:If it's reduced travel because of fear of Ebola...just goes to show how much travel is discretionary, doesn't it?

If we cut air travel in half what harm would come of it other then some vacation resort hotels going out of business?