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Business
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Title: Why Are Oil Prices Rising?
Source: Bloomberg Businnessweek
URL Source: http://www.businessweek.com/blogs/r ... s/2009/05/why_are_oil_pri.html
Published: May 12, 2012
Author: Steve LeVine
Post Date: 2012-03-24 09:06:49 by lucysmom
Keywords: None
Views: 6861
Comments: 45

Many are asking the question about oil prices: Is this deja vu all over again? Didn’t we just go through a several-year run-up in prices based largely not on fundamentals, but on traders bidding them up, ultimately to $147 a barrel? Only then to see them plunge to $32 a barrel?

If one puts stock in the plunge, then there appears to be air in the run-up today to a six-month-high of $60 a barrel. How much is anyone’s guess. The other day, one exceedingly smart oil analyst privately put it in the range of $5 to $10 a barrel.

Here is the case for a price bubble: Oil inventories are at a 19-year high; the U.S. alone has some 1 billion barrels sitting in storage tanks, according to Mark Williams at the Associated Press. Demand for oil is set to fall to its lowest level in five years, says the U.S. Energy Information Administration.

The opposite case goes as follow: The market is factoring in expected inflation because of global deficit spending; Chinese investment spending is reviving. Over at Alaron, Phil Flynn says these are also genuine “fundamentals.”

Regardless, there always seems to be reason offered up to trust in a price run-up. After all, markets are all about emotions, as Robert Shiller notes. Yet, there are still sober voices. In my view, the Financial Times’ Chris Flood delivers it straight: Prices are rising because of various types of trading gambles. Flood quotes Mike Wittner, a senior oil analyst at Société Générale saying the following: “Recent price strength is not based on fundamentals, but on financial flows.”

Over at the Oil Drum, Rune Likvern says up to 3 million barrels a day of oil is being bought purely for storage, including on the sea. But he predicts that such purchases – which help to prop up prices – will decline because storage is becoming harder and harder to find; when they do, Likvern says, prices will fall substantially.

It’s a fool’s game to predict oil prices. That doesn’t stop a lot of people, of course, especially the traders.

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Begin Trace Mode for Comment # 25.

#1. To: A K A Stone, Anti-ping to CE, Fred Mertz, Godwinson, go65, war, no gnu taxes, Skip Intro, ferret mike, jwpegler, brian s, mininggold, mcgowanjm (#0)

In my view, the Financial Times’ Chris Flood delivers it straight: Prices are rising because of various types of trading gambles. Flood quotes Mike Wittner, a senior oil analyst at Société Générale saying the following: “Recent price strength is not based on fundamentals, but on financial flows.”

ping

lucysmom  posted on  2012-03-24   9:10:57 ET  Reply   Untrace   Trace   Private Reply  


#2. To: lucysmom (#1)

Reason 1:

Embargo of Iranian oil.

Reason 2:

Federal Reserve fiancialization putting Zero % rate $$$ into the banksters hands.

Whom immediately put the $$$ back into 3% FedRes risk free bonds

and

into commodities like oil.

Reason 3:

Reason 1 & 2 are possible because Peak Oil happened in May of 05.

mcgowanjm  posted on  2012-03-24   9:15:01 ET  Reply   Untrace   Trace   Private Reply  


#3. To: mcgowanjm (#2)

Hey, spambot, the value of the dollar under your pres'nit has been plummeting. The price 'seems' to change due to the increasing inflation caused by one of your own in DC.

Rudgear  posted on  2012-03-24   9:18:30 ET  Reply   Untrace   Trace   Private Reply  


#6. To: Rudgear (#3)

...the value of the dollar under your pres'nit has been plummeting. The price 'seems' to change due to the increasing inflation...

So then, according to your theory, when the price of a barrel of oil dropped from $147 a barrel to $30 a barrel in 2008, the dollar deflated?

lucysmom  posted on  2012-03-24   9:32:15 ET  Reply   Untrace   Trace   Private Reply  


#10. To: lucysmom, mcgowanjm (#6)

Four spam posts in a row. Do either of you 'toons post at any other web site or is this the only one which will have you?

Rudgear  posted on  2012-03-24   10:04:27 ET  Reply   Untrace   Trace   Private Reply  


#12. To: Rudgear (#10) (Edited)

Yes, they've been lying to you about our energy predicament for 30 years, ever since Ronald Reagan defeated Jimmy Carter after the latter tried to tell the country the truth about peak oil. You and everyone else who is now whining about high gasoline prices didn't want to hear it then, and now you're all butt hurt about it.

Do either of you 'toons post at any other web site or is this the only one which will have you?

Do any of your 'rush brothers' care to talk about the price of oil?

See, I don't know about lucysmom, but 'oil' and 'finance' are second nature.

Takes absolutely zero effort to type in info on it.

Care to reply to the

PRICE OF YOUR HOUSE being inflationary?

Of course not.

mcgowanjm  posted on  2012-03-24   10:13:59 ET  Reply   Untrace   Trace   Private Reply  


#14. To: mcgowanjm (#12)

I don't listen to Rush. Nitwit. Btw, you still in evacuation mode down there on the Gulf? Still waiting on your progress report.

Rudgear  posted on  2012-03-24   10:16:52 ET  Reply   Untrace   Trace   Private Reply  


#17. To: Rudgear (#14)

I don't listen to Rush. Nitwit.

So you just channel him then. Rube.

Btw, you still in evacuation mode down there on the Gulf? Still waiting on your progress report.

Off subject? While accusing me of ranting?

Like I said, you idea of 'rant' is not what you think it means...;}

Nat Geogarphic:

"Advertise | AdChoices

As they walk the sands of Orange Beach, Alabama, T. Prabhakar Clement and Joel Hayworth have no difficulty finding traces of the Deepwater Horizon disaster—in fact, the Auburn University researchers have a harder time making sure those traces don't stick to their feet.

On a mid-February weekend, oil—in the form of hundreds of sticky tar balls—had washed up all over the beach following a storm the night before..."

And about the evac. The USSA doesn't do evac. Even if a Fukushima happens at say San Onofre.

OR a USbpEcocide with 2 million gal of antifreeze on top.

Gulf Dolphins Exposed to Oil Are Seriously Ill, Agency Says

New York Times (blog)‎ - 20 hours ago By LESLIE KAUFMAN Dolphins in Barataria Bay off Louisiana, which was hit hard by the BP oil spill in 2010, are seriously ill, and their ailments are ...

Dolphins still sick from BP oil spill msnbc.com‎ - 16 hours ago

Keep laughing, yo yo....;} Quarantine with Military roadblocks. You'll die where you stand....;}

mcgowanjm  posted on  2012-03-24   11:47:07 ET  Reply   Untrace   Trace   Private Reply  


#18. To: mcgowanjm (#17)

See? This is the trouble with you and those like you. You know nothing about which you speak or those with whom you speak and assume the world and everyone in it conforms to your baseless assumptions. Your lifetime of lies has left you insane and your posting content and volume prove it beyond any doubt. I always heard a mind was a terrible thing to waste.

Rudgear  posted on  2012-03-24   11:53:59 ET  Reply   Untrace   Trace   Private Reply  


#25. To: Rudgear (#18)

I always heard a mind was a terrible thing to waste.

Well, you heard that right.

But the truth of that was like you walking into a stranger.

You got up, dusted yourself off, and kept walking like nothing had happened....;}

h/t Winston Churchill for that. BTW another racist....they don't all live in Amerika.

mcgowanjm  posted on  2012-03-24   12:00:50 ET  Reply   Untrace   Trace   Private Reply  


Replies to Comment # 25.

        There are no replies to Comment # 25.


End Trace Mode for Comment # 25.

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