Why are oil prices rising again?
09 August 2012, 11:40 AM
#1
Scooby Regular
Thread Starter
iTrader: (2)
Join Date: Apr 2004
Location: Somewhere in Kent, sniffing some V-Power
Posts: 15,029
Likes: 0
Received 0 Likes
on
0 Posts
Why are oil prices rising again?
As above, surely most of the world is demanding less.
Have they cut back on supply or something?
Have they cut back on supply or something?
09 August 2012, 12:25 PM
#5
Scooby Senior
Join Date: Mar 2003
Location: Next door to the WiFi connection
Posts: 16,293
Likes: 0
Received 0 Likes
on
0 Posts
09 August 2012, 12:36 PM
#7
Scooby Regular
Join Date: Aug 2000
Location: God's promised land
Posts: 80,907
Likes: 0
Received 0 Likes
on
0 Posts
The obvious but unrewarding answer is that demand is greater than supply. Most people seem to think that $90 per barrel is about the fair value, so you could argue that you've just had a period of overly-cheap petrol. Generally the price of crude at the moment is inversely correlated to the European crisis, so as things look less precarious economically, oil goes up as people assume economic activity will increase and demand for oil will increase with it. If Europe blows up, oil prices will crash and gold prices will go to the moon.
Trending Topics
09 August 2012, 12:48 PM
#8
Scooby Regular
10 August 2012, 12:32 AM
#12
Scooby Senior
Join Date: Mar 2003
Location: Next door to the WiFi connection
Posts: 16,293
Likes: 0
Received 0 Likes
on
0 Posts
Dont get me wrong, Im a consumer too, but its not supply and demand, its actually greed! Oil is consumed most (other than industry) in vehicles for the least justification.
10 August 2012, 11:13 AM
#14
Scooby Regular
Join Date: Oct 2003
Location: Runway two seven right.
Posts: 6,652
Likes: 0
Received 0 Likes
on
0 Posts
According to Quentin Wilson its down to fund managers and bonuses. But those in power are all in the game and will do bugger all to stop it.
It really is time that everybody - but most of all politicians and financial regulators - understood that the price of a barrel of crude oil isn't determined by supply and demand, but by Fund Managers.
These are blokes who bet on the rise in prices of commodities and work for hedge funds, pension funds, investment banks and commodity trading firms. They don't use the oil or take delivery of it, they just buy and sell it to make profit. And their actions - the amount of money flowing in and out of the oil commodity market - mean that you and I always pay around $30 more for a barrel than we should. This is the debilitating effect that Fund Managers have on the global oil market.
Back in June Brent Crude was $80 a barrel, yet today its $107. Have the fundamentals of supply and demand changed in those two-and-a-bit months? Have the Asian, US or European economies improved? Of course not. In fact, if anything, the global economy has got worse and the supply of oil floating around the world in tankers is at an all time high. So why the hike in price?
Because back in June those Fund Managers sold their holdings to short the market, lower prices and then bought oil futures back to hike them up again. That's why we see these three monthly, or quarterly cycles, in the price. Money and capital flows in and out and prices go up and down. The market is being manipulated to cause movements in price that earn the Fund Managers profit. Buy some future oil contracts at $80 a barrel, run the price up, leak some dubious information to the media about the supply of oil from Iran being threatened or trouble with a pipeline in Sudan, and bingo, suddenly you've tickled the market up to $109 by the end of the quarter. You then sell at a profit and do the whole thing again in the next three month cycle. Look at the numbers and you'll see that $30 profit between the actual price and the rigged price coming up again and again in each quarterly cycle. Compared to the rigging of the Libor interest rate, this is persistent, regular and knowing manipulation of the price of oil for profit. And its been going on for years.
But this price rigging is much more serious now because of the damage its doing to a broken global economy. As I write, oil prices should be at $75 and we should all be benefiting from cheaper fuel due to high unemployment, reduced GDP and weak manufacturing. Globally demand for oil is low. But the Fund Managers won't let the fundamentals of supply and demand kick in because if they do, they won't hit their three-monthly profit targets. This market rigging keeps slowing the economic recovery down because artificially high fuel prices hold back growth and put unnecessary costs into the supply chain. As soon as parts of the economy start to pick up, the Fund Managers rig oil prices up again and global growth automatically slows.
Over the last five years the amount of oil supply in the world hasn't really changed, but the price has bounced between $60 and $145. That epic volatility is due in most part not to the vagaries of supply and demand, but to market rigging. This is long-running scandal that makes Libor Gate look about as serious as someone playing hopscotch in a cathedral. The oil market is being artificially controlled by Fund Managers and their reprehensible business model is gradually draining the resources of companies and consumers all over the world and threatening the economic recovery.
We need a root and branch investigation into this dark and shadowy market and its official regulators need to consider that Fund Managers should actually take delivery of the oil they buy after a few days and not deliberately sit on it for three long months, so they can force the prices up. We need stable oil prices and without them our economy won't recover. Instead of tinkering with interest rates the Bank of England and the government should force a major investigation into the role of Fund Managers and the oil future market. If they don't they'll just be allowing one of the world's most serious and blatant forms of financial skulduggery to continue completely unchecked.
It really is time that everybody - but most of all politicians and financial regulators - understood that the price of a barrel of crude oil isn't determined by supply and demand, but by Fund Managers.
These are blokes who bet on the rise in prices of commodities and work for hedge funds, pension funds, investment banks and commodity trading firms. They don't use the oil or take delivery of it, they just buy and sell it to make profit. And their actions - the amount of money flowing in and out of the oil commodity market - mean that you and I always pay around $30 more for a barrel than we should. This is the debilitating effect that Fund Managers have on the global oil market.
Back in June Brent Crude was $80 a barrel, yet today its $107. Have the fundamentals of supply and demand changed in those two-and-a-bit months? Have the Asian, US or European economies improved? Of course not. In fact, if anything, the global economy has got worse and the supply of oil floating around the world in tankers is at an all time high. So why the hike in price?
Because back in June those Fund Managers sold their holdings to short the market, lower prices and then bought oil futures back to hike them up again. That's why we see these three monthly, or quarterly cycles, in the price. Money and capital flows in and out and prices go up and down. The market is being manipulated to cause movements in price that earn the Fund Managers profit. Buy some future oil contracts at $80 a barrel, run the price up, leak some dubious information to the media about the supply of oil from Iran being threatened or trouble with a pipeline in Sudan, and bingo, suddenly you've tickled the market up to $109 by the end of the quarter. You then sell at a profit and do the whole thing again in the next three month cycle. Look at the numbers and you'll see that $30 profit between the actual price and the rigged price coming up again and again in each quarterly cycle. Compared to the rigging of the Libor interest rate, this is persistent, regular and knowing manipulation of the price of oil for profit. And its been going on for years.
But this price rigging is much more serious now because of the damage its doing to a broken global economy. As I write, oil prices should be at $75 and we should all be benefiting from cheaper fuel due to high unemployment, reduced GDP and weak manufacturing. Globally demand for oil is low. But the Fund Managers won't let the fundamentals of supply and demand kick in because if they do, they won't hit their three-monthly profit targets. This market rigging keeps slowing the economic recovery down because artificially high fuel prices hold back growth and put unnecessary costs into the supply chain. As soon as parts of the economy start to pick up, the Fund Managers rig oil prices up again and global growth automatically slows.
Over the last five years the amount of oil supply in the world hasn't really changed, but the price has bounced between $60 and $145. That epic volatility is due in most part not to the vagaries of supply and demand, but to market rigging. This is long-running scandal that makes Libor Gate look about as serious as someone playing hopscotch in a cathedral. The oil market is being artificially controlled by Fund Managers and their reprehensible business model is gradually draining the resources of companies and consumers all over the world and threatening the economic recovery.
We need a root and branch investigation into this dark and shadowy market and its official regulators need to consider that Fund Managers should actually take delivery of the oil they buy after a few days and not deliberately sit on it for three long months, so they can force the prices up. We need stable oil prices and without them our economy won't recover. Instead of tinkering with interest rates the Bank of England and the government should force a major investigation into the role of Fund Managers and the oil future market. If they don't they'll just be allowing one of the world's most serious and blatant forms of financial skulduggery to continue completely unchecked.
10 August 2012, 12:24 PM
#16
Scooby Regular
Join Date: Aug 2000
Location: God's promised land
Posts: 80,907
Likes: 0
Received 0 Likes
on
0 Posts
Flight Man, you're buying into a well-worn conspiracy theory there. And ok if it resonates with you, i'm not here to talk you out of it. But that 30% number is pure speculation in itself, it really is. I cannot emphasise that enough. Oil is only one of numerous commodities which are traded freely on the open market. True, a lot of trade takes place purely in the search for profit, but to quantify the effect that has on the actual price of those commodities is at best, guesswork.
10 August 2012, 12:56 PM
#17
Scooby Regular
The obvious but unrewarding answer is that demand is greater than supply. Most people seem to think that $90 per barrel is about the fair value, so you could argue that you've just had a period of overly-cheap petrol. Generally the price of crude at the moment is inversely correlated to the European crisis, so as things look less precarious economically, oil goes up as people assume economic activity will increase and demand for oil will increase with it. If Europe blows up, oil prices will crash and gold prices will go to the moon.
The highest a barrel got from memory was around $150 last year and the highest forecourt price we had was about £1.50 a litre. The barrel price as you say has been down to $77 in June yet where were the massive drops in forecourt prices to account for that 50% difference against its highest price (obviously the tax portion of the forecourt price doesn't alter)?
The oil companies have been shafting motorists left right and centre since the price dropped from $150 a barrel.
Last edited by An0n0m0us; 10 August 2012 at 01:02 PM.
10 August 2012, 01:08 PM
#18
Scooby Regular
Join Date: Aug 2000
Location: God's promised land
Posts: 80,907
Likes: 0
Received 0 Likes
on
0 Posts
Yep, that's a question i can't answer for you; petrol companies will use any excuse not to pass on wholesale price falls because they know the consumer will have become used to a higher price point, or are unable to force the price down because petrol is almost a necessity for most people.
But it's sort of the same in lots of markets. You often hear about how the cost of coffee, or gas, or something else "has" to rise because of global prices, lack of supply, droughts, plagues, whatever. And to the cynical mind this is just a ploy of those industries to restore margins, and then the cycle is repeated when everybody else does the same thing and the cost of living goes up again etc etc.
But it's sort of the same in lots of markets. You often hear about how the cost of coffee, or gas, or something else "has" to rise because of global prices, lack of supply, droughts, plagues, whatever. And to the cynical mind this is just a ploy of those industries to restore margins, and then the cycle is repeated when everybody else does the same thing and the cost of living goes up again etc etc.
Last edited by TelBoy; 10 August 2012 at 01:09 PM.
10 August 2012, 03:39 PM
#19
Scooby Regular
Thread Starter
iTrader: (2)
Join Date: Apr 2004
Location: Somewhere in Kent, sniffing some V-Power
Posts: 15,029
Likes: 0
Received 0 Likes
on
0 Posts
Yep, that's a question i can't answer for you; petrol companies will use any excuse not to pass on wholesale price falls because they know the consumer will have become used to a higher price point, or are unable to force the price down because petrol is almost a necessity for most people.
But it's sort of the same in lots of markets. You often hear about how the cost of coffee, or gas, or something else "has" to rise because of global prices, lack of supply, droughts, plagues, whatever. And to the cynical mind this is just a ploy of those industries to restore margins, and then the cycle is repeated when everybody else does the same thing and the cost of living goes up again etc etc.
But it's sort of the same in lots of markets. You often hear about how the cost of coffee, or gas, or something else "has" to rise because of global prices, lack of supply, droughts, plagues, whatever. And to the cynical mind this is just a ploy of those industries to restore margins, and then the cycle is repeated when everybody else does the same thing and the cost of living goes up again etc etc.
If the fuel companies are still shifting stock bought at a higher price, of course they are not to drop the price to you and me. This will make their margins smaller.
Problem is they seem to rise immediately when crude starts going up.
Flightman has put forward a theory that many people in the business community share.
However, it still is supply and demand even if it is from fund managers.
Is it right? Ask whoever supports a capitalist society.
The rich get richer and the rest of us have the real value of our earnings decrease day by day.
Still, I've just received a cheque for £420 from our house builder as they did not install the correct levels of insulation when theu built the property.
Could be worse.
Thread
Thread Starter
Forum
Replies
Last Post
