Oil speculation

[roofeditor]

I think there was a thread that got spirited and went to the vault, for my part I'll try to keep it on the technical end.

I think checkthisout and MackE7 bantered on the possibility of speculators driving up the prices or not. One argument was speculators were doing it and the other argument was simple supply and demand.

In one month oil has dropped 40% and since march it has dropped from $147 down to $60 something and as low as $59 for Brent sea crude. 147 down to 59 bucks is about a 60% drop in price. Now I'm fairly sure that oil demand did not drop 60%.

In that oil speculation is 3 or more months out, some speculators got stuck holding the bag. Unfortunately they only had to put up 5% for the options. I'm an advocate of 50% like margin calls.

[chuckster57]

Originally Posted by roofeditor

Unfortunately they only had to put up 5% for the options. I'm an advocate of 50% like margin calls.

I will agree with you that a 50% margin would be a good thing. It seems like the "market" is too volatile and the price at the pump changes with the wind. It takes a loonngg time to come down but just a whisper can make it go back up. If the investors (speculators) had to risk 1/2 of the money...it would probably be a lot more stable. Demand has been stable for quite a while. I haven't seen 60% LESS diesels on the road and my friends that drive them haven't put 60% LESS miles on them. I don't feel the least bit sorry for the investors that may have lost $...that's what speculation is about win some lose some. If 50% is required then they might be a little more conservative and the price might not take off like a space shuttle..Just my $.02

[checkthisout]

Originally Posted by roofeditor

I think there was a thread that got spirited and went to the vault, for my part I'll try to keep it on the technical end.

I think checkthisout and MackE7 bantered on the possibility of speculators driving up the prices or not. One argument was speculators were doing it and the other argument was simple supply and demand.

In one month oil has dropped 40% and since march it has dropped from $147 down to $60 something and as low as $59 for Brent sea crude. 147 down to 59 bucks is about a 60% drop in price. Now I'm fairly sure that oil demand did not drop 60%.

In that oil speculation is 3 or more months out, some speculators got stuck holding the bag. Unfortunately they only had to put up 5% for the options. I'm an advocate of 50% like margin calls.

All the money the large investment firms were using to buy oil futures has dried up too meet obligations for derivatives (??????) etc thus popping the bubble in commodities.


I can understand how a true supply/demand relationship will not be linear with price but it's pretty obvious the price increase was driven with hot money and had nothing to do with actual demand.

[roofeditor]

Originally Posted by checkthisout

All the money the large investment firms were using to buy oil futures has dried up too meet obligations for derivatives (??????) etc thus popping the bubble in commodities.


I can understand how a true supply/demand relationship will not be linear with price but it's pretty obvious the price increase was driven with hot money and had nothing to do with actual demand.

Bubble a few years back. Sun Micro Systems hit $253 and had no PE at all. Today it's like $4.48? But hey it has a PE of 9.14!!! It like the oil bubble was simply gambling.

[Pappy19]

I just bought a bunch of Atlas Energy Resources NYSE-ATN. there's a new oil shale find in NY and Pennsylvania. This company has found oil in 38 out of 40 drills. It should be a good one-

[checkthisout]

Originally Posted by Pappy19

I just bought a bunch of Atlas Energy Resources NYSE-ATN. there's a new oil shale find in NY and Pennsylvania. This company has found oil in 38 out of 40 drills. It should be a good one-

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