Who knows what the speculators were thinking? The speculators took a financial bath when they were taking delivery of $147. per barrel of oil. It put a lot of them out of business!
Today's prices have less to do with speculation and more to do with a lack of production.
Collecting more taxes than is absolutely necessary is legalized robbery. Calvin Coolidge
July 11, 2008 -- Oil prices spiked Friday as continued tensions in the Middle East and concerns of renewed violence in Nigeria pushed the price for a barrel of oil to a record near $147.
By midday in Europe, light, sweet crude for August delivery jumped $5.25 to $146.90 on the New York Mercantile Exchange.
Oil prices had fallen $10 over two days to start the week and as oil rebounded Friday, Dow Jones industrial average futures fell more than 120 points.
In London, August Brent crude soared $4.92 to $146.95 a barrel on the ICE Futures exchange after hitting a record $147.25.
"There's always a fear premium in pricing. The tensions in Iran and the threat of supply disruption will help support oil prices," said Jeff Brown, managing director of FACTS Global Energy in Singapore.
JBC Energy in Vienna, Austria, said the news about Iran, Nigeria, as well as a reported threat of a strike by oil workers in Brazil were "enough to wake the market from its two-day slumber."
A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch, drawing buyers back to jittery energy markets.
Both the U.S. and Israel have not ruled out a military strike on Iran.
Just backing up my post about what caused oil prices to rise RK
Last edited by Roger Perry; 01-11-2011 at 04:15 PM.
Speculators don't take delivery in actual oil. What they did was re-sell those options at a much lower price than they bought them at.
Like Dave says, there is much speculation about lack of production. In fact in the article that duckheads posted a link to we find:
The report raised speculation that the government might slow down production in the Gulf of Mexico, which would lead to higher prices. "As it stands right now, this is a little bit of a concern in the oil patch," PFGBest analyst Phil Flynn said.Oil prices also got a boost from another blast of cold and snow headed into the Northeast. Winter storm warnings were posted as the third snowstorm in less than three weeks took aim at the New York City area. Prices rose for heating oil, which is used mostly in the Northeast to warm older homes and commercial buildings. The price of heating oil has risen almost 5 percent this week.So we have speculation about production. We have speculation about what cold weather might do to supply. And we have speculation about the economy and Europe bailouts.Oil prices also got support from Japan's promise to buy bonds to help finance Europe's bailout fund. The money from the sale will be used as part of an international bailout of Ireland, even as speculation lingers that Portugal and perhaps even Spain may be forced to seek help with financial problems.
"Every time we get a sign that the market is going to bail out Europe, it's always been bullish for oil," Flynn said.
What they won't find to speculate about next.
I follow the market news very closely on a daily basis, and all I can say after YEARS of doing this is that Wall Street is manic with their swings between optimism and panic.
Don't get me wrong, I am ALL FOR DRILLING. I just am sick and tired of everyone panicking every time someone sneezes.
Last edited by Buzz; 01-11-2011 at 05:03 PM.
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