Jump to content
House Price Crash Forum
Guest

Oil Heading Back Down

Recommended Posts

Oddly I noticed 2 people at the side of the road this weekend filling up their car from a green can.

Not seen this for a while

Sprite or 7up? :P

Share this post


Link to post
Share on other sites

Can anyone explain why the price has slumped by so much? I understand demand has fallen, and the US has been pumping more, but surely there's more to it than that. I must admit I don't follow oil markets at all.

Edited by spunko2010

Share this post


Link to post
Share on other sites

Can anyone explain why the price has slumped by so much? I understand demand has fallen, and the US has been pumping more, but surely there's more to it than that. I must admit I don't follow oil markets at all.

I believe a lot of it is due to supply being bigger than demand and the over supply is such that most storage facilities are full so there is literally no where for it to be stored except for the expensive container ship its currently sat in...

The article highlights that the finance side of the oil market is also now 7x larger than the actual oil market so its possible that things are being distorted leading to sharper falls and rises than would otherwise be the case....

Share this post


Link to post
Share on other sites

I believe a lot of it is due to supply being bigger than demand and the over supply is such that most storage facilities are full so there is literally no where for it to be stored except for the expensive container ship its currently sat in...

The article highlights that the finance side of the oil market is also now 7x larger than the actual oil market so its possible that things are being distorted leading to sharper falls and rises than would otherwise be the case....

Is there anything left that has NOT been financialised ?

Share this post


Link to post
Share on other sites

Yes I find it incredible that most of the population think it's supply and demand, when in fact it is a casino. The world economic system has been allowed to go mad.

Is that article saying that the producers are getting only one-seventh of the world price of oil?

Share this post


Link to post
Share on other sites

Yes I find it incredible that most of the population think it's supply and demand, when in fact it is a casino. The world economic system has been allowed to go mad.

Is that article saying that the producers are getting only one-seventh of the world price of oil?

No its more that on average each barrel of oil is being bought and sold at least 7 times more than necessary.....

Share this post


Link to post
Share on other sites

No its more that on average each barrel of oil is being bought and sold at least 7 times more than necessary.....

That's the nature of the markets though, and it's a good thing. It demonstrates liquidity, which mean tight spreads, efficient pricing, low cost hedging. In fact a lot of it is down to hedging as traders sell one month's futures and buy another, or hedge with options. This spreads risk out amongst those who want it, reducing systemic risk overall, and stabilising the market.

Share this post


Link to post
Share on other sites

Is there anything left that has NOT been financialised ?

A very good question. A century or so ago economists from Marx to Saint-Simon assumed that banking and finance would be industrialised, while landed wealth would be 'socialised' and the free lunch it conferred (economic rent) would be fully taxed to provide for the public good. That manifestly did not happen. Philip Mirowski's 'The Road From Mt Pelerin: the making of the neoliberal thought collective' attempts to answer why.

http://uberty.org/wp-content/uploads/2015/10/mt-pelerin.pdf

Share this post


Link to post
Share on other sites

Can anyone explain why the price has slumped by so much? I understand demand has fallen, and the US has been pumping more, but surely there's more to it than that. I must admit I don't follow oil markets at all.

The price rose -according to Hodges- because post QE there was financialization of oil and commodities which distorted the demand/supply equilibrium ie the price would never have gone above $100 if it had been down to demand for the actual product.Thus much of the drop is the market finding it's equilibrium.

I read his blog a lot and it's a super read.

Edited by Sancho Panza

Share this post


Link to post
Share on other sites

The price rose -according to Hodges- because post QE there was financialization of oil and commodities which distorted the demand/supply equilibrium ie the price would never have gone above $100 if it had been down to demand for the actual product.Thus much of the drop is the market finding it's equilibrium.

I read his blog a lot and it's a super read.

...or to paraphrase...some central banker c**t, printed more money and used it to prop up the rich mens assets.

Share this post


Link to post
Share on other sites

15 year cycle.

When its up the companies behave like it will never go down.

When its down they behave like it will never recover.

Anything below $40/barrel you might as well leave it in the ground, its easier to store it there and wait for the price to rise.

Share this post


Link to post
Share on other sites

15 year cycle.

When its up the companies behave like it will never go down.

When its down they behave like it will never recover.

Anything below $40/barrel you might as well leave it in the ground, its easier to store it there and wait for the price to rise.

Under normal circumstances, yes. However if there's a disruptive technology just around the corner which is going to make your product obsolete, then what do you do?

Pump like there's no tomorrow, I'd imagine...

Edited by Craig_

Share this post


Link to post
Share on other sites

P.S. So good call.

'Weale shifts stance back to August rate cut.'

Know-nothing charlatan demonstrates that he knows nothing about economics. :rolleyes:

Share this post


Link to post
Share on other sites

'Weale shifts stance back to August rate cut.'

Know-nothing charlatan demonstrates that he knows nothing about economics. :rolleyes:

Bankers say more money for bankers.

Go figure.

The bankers need to be taken out of the rate setting equation ( as it used to be ).

The central bankers will not vote to make their own industry smaller and sustainable.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   101 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.