Posted on 10/15/2006 9:33:28 PM PDT by grey_whiskers
As you have probably noticed, during the run-up to the Iraq war, and then for awhile after it started, gasoline prices took a short…trip. Upwards. This was readily explained in the press as due to “tensions in the Gulf”. OK, I guess that’s fair. However, since that time, until quite recently, oil prices have stayed high. Higher than I would have expected. So let’s take a trip down memory lane, and see what reasons we can find being given for the high oil prices. And we’ll begin in 2002, during the run-up to the Iraq War. My source for oil prices is this link. I’m not an industry expert, so I don’t know if these prices are revised, adjusted for inflation, or what. But the prices quoted tell an interesting story nonetheless.
In January 2002, crude oil prices were running about $17 or $18 per barrel. Remember, this was within a few months after 9-11, and the US economy was running headlong into a recession. By January 2003, oil prices had spiked up to nearly double, actually hitting $35 per barrel at one point. Yes, that sounded high, back then. The odd thing is, the price actually *dropped* during the immediate run-up to the Iraq invasion. During May 2003, there was some oil being sold on the spot market for less than $24 per barrel.
From there, oil prices showed a steady, continuous increase, up to the mid- or upper- 30’s in dollars per barrel, where they stayed until around May 2004. From there, they took off on another prolonged hike, hitting the magical $60 per barrel mark in June of 2005, and going up from there, until they peaked in July and August of this year, in the neighborhood of $72 per barrel. That’s a quadrupling of prices in four years; and a doubling in the past two years.
So, what are the reasons given for the price hikes in oil? Here are a few:
The BBC blames things on the growing economies of India and China. The only problem I have with this is the level of total imports of oil by China and India. Business Week reported in mid-2005 that India’s oil imports at that point were 1.4 million barrels a day, and China’s are about 7.1 million barrels a day—meaning that India’s and China’s combined demand, after all the increase in their economies, are less than half of the US oil imports. Is that really enough to account for a quadrupling of oil prices in three or four years?
Here are some other reasons which have cropped up in the news recently:
Unrest in Nigeria
The threat of Chavez nationalizing oil in Venezuela
Uncertainty of war with Iran, complete with the possibility of missile attacks on Mid-East Supertankers and the complete closure of the Straits of Hormuz
The disruption of Caribbean oil derricks by Hurricanes Katrina and Rita
Disruption of the pipeline at Prudhoe Bay
…and of course, “peak oil”.
All of these things made me suspicious; every day there was a “new” reason for oil to “hit record highs”: but curiously enough, when one of the aggravating factors went away, the price seldom dropped; instead, a “new” reason was trotted out, leaving the price of oil absolutely no alternative but to seek out new all-time record highs.
Until recently, that is. When the following event happened.
Does anyone remember the news stories about the hedge fund Amaranth Partners?
They had a hot-shot young analyst in his 30’s who made a number of highly leveraged bets on the prices of natural gas. And guessed wrong. So Amaranth partners lost billions of dollars—I have seen reports giving the amount anywhere from $6 billion to $8 billion. They are now laying off 60% of their staff—and I believe the analyst is walking off with a payday in the 10’s of millions of dollars.
What is interesting is that the daily spot oil prices seemed to dive off of a cliff right about the same time that Amaranth was taking a bath on its leveraged positions on natural gas. Now I know, natural gas isn’t oil. But maybe, just maybe? Did other hedge funds play with oil prices, the way Amaranth did with natural gas? Could it be that news of Amaranth’s collapse inspired some of the other funds to reduce their exposure?
I’m not saying this is completely right, but it is tantalizing. Let’s consider a couple of examples of shameless hype about “the sky’s the limit” for oil prices.
The Observer (“Oil is inevitably going straight to $100 a barrel!”) and Hermitage Captial (“Forget $100. It could go to over $250 a barrel.”)
For the nonce, Hermitage Capital has invested heavily in Russia. Their own website states:
William F. Browder
Chief Executive Officer
…
He has been credited with a number of breakthroughs in improving corporate standards at major Russian companies, including Unified Energy Systems, Sberbank and Gazprom.
Hmm, I wonder if Hermitage Capital had any ulterior motives in pushing oil prices higher? Naaah, couldn’t be. (*)
And it would be a Machiavellian touch, if it were the hedge funds behind the price of oil…that Congress was inspired to go after oil retailers as the price gougers, and the CEO of ExxonMobil was demonized. Sure, the price at the pump was way too high to be driven by our demand. But that doesn’t mean the oil companies were the villains, either.
“Pay no attention to the commodities speculator behind the curtain.”
(*)This kind of mindlessly quoting people who might have a vested interest in the story, brings to mind the famous quip of Scott Adams in The Dilbert Principle:
“Reporters are faced with the daily choice of painstakingly researching stories or writing whatever people tell them. Both approaches pay the same.”
Cheers!
Bloomberg has the prices right, of course. Your interpretation of them is, uh, dubious. No serious oil trader trades on a snapshot; serious trading is done on ''the strip'', that is, the series of spot plus futures contracts going out 6, 12, even 18 months.
You post: In January 2002, crude oil prices were running about $17 or $18 per barrel
Hard facts: here are the daily prices, straight from NYMEX, for both Feb and March WTI crude during Jan 2002
(pls note -- the Feb contract always expires before the end of Jan)
Detail history of Feb Crude Oil for the contract year 2002, from 01-02 to 02-01...and the March contract...
date open high low close date open high low close 2001-12-31 20.30 20.43 19.66 19.84 2002-01-11 20.35 20.38 19.60 19.68 2002-01-02 20.00 21.07 19.86 21.01 2002-01-14 19.35 19.45 18.65 18.89 2002-01-03 20.78 21.10 20.32 20.37 2002-01-15 18.90 19.43 18.85 18.90 2002-01-04 20.85 21.70 20.72 21.62 2002-01-16 18.39 18.99 18.30 18.86 2002-01-07 21.50 22.00 21.20 21.48 2002-01-17 19.10 19.15 17.85 17.97 2002-01-08 21.20 21.50 21.03 21.25 2002-01-18 18.20 18.50 17.90 18.00 2002-01-09 20.70 20.95 20.11 20.18 2002-01-22 18.35 18.65 18.00 18.34 2002-01-10 20.20 20.48 19.85 20.38
Detail history of Mar Crude Oil for the contract year 2002, from 01-02 to 02-01
date open high low close date open high low close
2001-12-31 20.70 20.70 19.95 20.11 2002-01-17 19.75 19.80 18.50 18.63
2002-01-02 20.25 21.30 20.15 21.23 2002-01-18 18.90 19.14 18.52 18.66
2002-01-03 21.05 21.30 20.60 20.64 2002-01-22 19.00 19.18 18.70 18.98
2002-01-04 21.20 21.99 21.08 21.91 2002-01-23 19.25 19.70 19.22 19.50
2002-01-07 21.82 22.30 21.50 21.78 2002-01-24 19.25 19.88 19.17 19.70
2002-01-08 21.53 21.80 21.35 21.57 2002-01-25 19.80 20.10 19.28 19.99
2002-01-09 20.95 21.30 20.55 20.65 2002-01-28 20.15 20.37 19.81 20.05
2002-01-10 20.65 20.98 20.35 20.90 2002-01-29 19.75 19.80 19.48 19.58
2002-01-11 20.90 20.90 20.20 20.32 2002-01-30 18.95 19.15 18.56 19.08
2002-01-14 20.00 20.05 19.30 19.41 2002-01-31 19.20 19.50 18.95 19.48
2002-01-15 19.48 19.85 19.38 19.44 2002-02-01 19.30 20.55 19.15 20.38
2002-01-16 18.96 19.60 18.94 19.48
$17-18? Don't think so. Effective price of crude (i.e. the front-month future) was over $19 for the bulk of the month.
Next: price in any market is not the be-all and end-all. Prices do not move for no reason, or because of ''Peak Oil'' or similar nonsense. They move because of the expectation of the mkt participants regarding future developments in the specified mkt.
The single most significant reason, 80-90% of the cause, for the price movement in crude from 2002 through April-May 2006 is this, and this only: from July 2002, the worldwide excess daily production capacity declined from 6.7 MM bbl-equivalents/day in July 2002 to -- are you ready? -- 0.6 MM bbl-equivalents/day in Jan 2006.
These figures are easily verified. I suggest you consult WTRG Economics, run by one of the finest energy mkt analysts in America (the world, for that matter -- the Russian Oil Ministry is a subscriber of his), Jim Williams, for complete details and analysis. Excess capacity has been the name of the game in crude pricing for years on end. The July 2002-Jan 2003 period is particularly interesting in this regard, btw: excess capacity dropped almost 2 MM bbl-equivalents/day in just 6 months. Why?
Demand increases? Sure, some. US ''recovery'' from a ''recession'' (hence anticipated reduced energy demand) that never happened? You bet. Supply uncertainty? No doubt. Idiots blowing up Iraqi pipe? Not at that point, but later on certainly. A new Muslim/infidel problem in Nigeria? Oh, yes. PDVSA's continuing degradation of their facilities? Absolutely. Indonesia becoming a net importer of crude and product during this period? Bet your life.
You post: The odd thing is, the price actually *dropped* during the immediate run-up to the Iraq invasion.
Odd? What's odd about it? I'll tell you what's odd: your use of the ''immediate'' period before the Iraqi campaign began on 2003-03-20. Here's the price history, day-by-day...but beginning just a little earlier than you prefer.
—— Detail history of May Crude Oil for the contract year 2003, from 01-02 to 04-01
date open high low close date open high low close 2002-12-31 27.80 28.55 27.70 28.50 2003-02-18 33.70 34.12 33.60 34.12 2003-01-02 28.95 29.08 28.75 28.84 2003-02-19 33.95 34.36 33.82 34.21 2003-01-03 29.05 29.62 28.95 29.62 2003-02-20 34.10 34.30 33.35 33.46 2003-01-06 29.50 29.50 28.85 28.99 2003-02-21 33.95 34.60 33.90 34.33 2003-01-07 28.70 28.85 28.50 28.73 2003-02-24 34.75 35.10 34.55 35.04 2003-01-08 28.20 28.52 28.00 28.52 2003-02-25 35.70 35.70 34.30 34.42 2003-01-09 28.90 29.38 28.75 29.38 2003-02-26 34.62 35.60 34.50 35.34 2003-01-10 29.30 29.40 28.85 29.04 2003-02-27 35.50 36.25 34.95 35.19 2003-01-13 28.85 29.70 28.85 29.64 2003-02-28 35.55 35.60 34.70 34.83 2003-01-14 30.00 30.05 29.73 29.97 2003-03-03 34.30 34.55 33.80 34.24 2003-01-15 30.30 30.55 30.07 30.48 2003-03-04 34.72 35.20 34.65 34.91 2003-01-16 30.80 31.05 30.65 30.82 2003-03-05 35.10 35.35 34.40 34.96 2003-01-17 30.70 31.15 30.40 30.95 2003-03-06 35.30 35.75 35.20 35.54 2003-01-21 30.70 31.10 30.48 30.96 2003-03-07 35.50 36.45 35.50 36.35 2003-01-22 31.00 31.01 30.60 30.77 2003-03-10 36.40 36.65 36.15 36.28 2003-01-23 30.80 30.95 30.25 30.46 2003-03-11 36.30 36.35 35.40 35.74 2003-01-24 30.47 31.20 30.37 31.12 2003-03-12 35.50 36.40 35.35 36.35 2003-01-27 31.00 31.05 30.45 30.49 2003-03-13 36.15 36.15 34.20 34.67 2003-01-28 30.90 31.00 30.70 30.94 2003-03-14 33.50 33.55 32.50 33.36 2003-01-29 30.90 31.90 30.85 31.72 2003-03-17 33.75 34.00 31.90 32.54 2003-01-30 31.70 32.05 31.70 31.95 2003-03-18 30.00 31.25 29.75 30.05 2003-01-31 31.65 32.05 31.55 31.80 2003-03-19 29.90 30.45 29.20 29.36 2003-02-03 31.50 31.70 31.25 31.34 2003-03-20 28.81 30.12 27.75 28.12 2003-02-04 31.55 32.10 31.50 32.04 2003-03-21 27.45 27.70 26.30 26.91 2003-02-05 32.15 32.65 31.75 32.37 2003-03-24 28.00 28.90 27.60 28.66 2003-02-06 32.75 32.75 32.35 32.40 2003-03-25 29.10 29.70 27.80 27.97 2003-02-07 32.70 33.20 32.60 33.13 2003-03-26 28.50 28.95 28.30 28.63 2003-02-10 33.10 33.10 32.45 32.60 2003-03-27 29.70 30.45 29.35 30.37 2003-02-11 32.68 33.35 32.65 33.27 2003-03-28 30.30 30.85 29.85 30.16 2003-02-12 33.42 33.55 32.85 33.35 2003-03-31 30.75 31.30 30.35 31.04 2003-02-13 33.70 33.95 33.55 33.92 2003-04-01 30.45 30.60 29.58 29.78 2003-02-14 33.95 34.10 33.50 34.04As is readily apparent from the table, crude ran up a tasty little 25% from the first of the year until it topped on March 10th, fully 10 days in front of the beginning of the Iraqi campaign. Conspiracy? Nothing of the sort.
Markets learn. The mkt participants were well aware of what happened to crude prices the last time a war kicked off in the Muddle East (no typo). The very day of Schwartzkopf's invasion, crude prices fell like a rock (and US bonds and 10-years, and Eurodollars, went crazy to the upside). Clearly, this was going to happen again to some extent when this war kicked off...but markets learn, ok? Markets are an anticipatory discounting mechanism of price...and the participants, knowing the past, were -- guess what? -- anticipating future developments by starting to sell crude ''early''.
And they were dead bang right, too.
There's not enough time to go through the rest of your post in detail, except to note that you are exactly right on one point: natural gas isn't crude. Natch prices have been drug by the heels by crude prices for about 2 years (hint: it's called the ''BTU spread''). This effect was disguised to a great extent by the one-off hurricane season in 2005, and the natgas bulls have in their turn been strung up by the heels by insisting on being long -- VERY long in Amaranth's case -- in what was and still is a dead bear mkt.
Your limericks are very good, and thank you for them. Your analysis of crude pricing, and energy pricing isn't nearly so good. Stick with the limericks.
FReegards!
Bloomberg has the prices right, of course. Your interpretation of them is, uh, dubious. No serious oil trader trades on a snapshot; serious trading is done on ''the strip'', that is, the series of spot plus futures contracts going out 6, 12, even 18 months.
You post: In January 2002, crude oil prices were running about $17 or $18 per barrel
Hard facts: here are the daily prices, straight from NYMEX, for both Feb and March WTI crude during Jan 2002
(pls note -- the Feb contract always expires before the end of Jan)
Detail history of Feb Crude Oil for the contract year 2002, from 01-02 to 02-01...and the March contract...
date open high low close date open high low close 2001-12-31 20.30 20.43 19.66 19.84 2002-01-11 20.35 20.38 19.60 19.68 2002-01-02 20.00 21.07 19.86 21.01 2002-01-14 19.35 19.45 18.65 18.89 2002-01-03 20.78 21.10 20.32 20.37 2002-01-15 18.90 19.43 18.85 18.90 2002-01-04 20.85 21.70 20.72 21.62 2002-01-16 18.39 18.99 18.30 18.86 2002-01-07 21.50 22.00 21.20 21.48 2002-01-17 19.10 19.15 17.85 17.97 2002-01-08 21.20 21.50 21.03 21.25 2002-01-18 18.20 18.50 17.90 18.00 2002-01-09 20.70 20.95 20.11 20.18 2002-01-22 18.35 18.65 18.00 18.34 2002-01-10 20.20 20.48 19.85 20.38
Detail history of Mar Crude Oil for the contract year 2002, from 01-02 to 02-01
date open high low close date open high low close
2001-12-31 20.70 20.70 19.95 20.11 2002-01-17 19.75 19.80 18.50 18.63
2002-01-02 20.25 21.30 20.15 21.23 2002-01-18 18.90 19.14 18.52 18.66
2002-01-03 21.05 21.30 20.60 20.64 2002-01-22 19.00 19.18 18.70 18.98
2002-01-04 21.20 21.99 21.08 21.91 2002-01-23 19.25 19.70 19.22 19.50
2002-01-07 21.82 22.30 21.50 21.78 2002-01-24 19.25 19.88 19.17 19.70
2002-01-08 21.53 21.80 21.35 21.57 2002-01-25 19.80 20.10 19.28 19.99
2002-01-09 20.95 21.30 20.55 20.65 2002-01-28 20.15 20.37 19.81 20.05
2002-01-10 20.65 20.98 20.35 20.90 2002-01-29 19.75 19.80 19.48 19.58
2002-01-11 20.90 20.90 20.20 20.32 2002-01-30 18.95 19.15 18.56 19.08
2002-01-14 20.00 20.05 19.30 19.41 2002-01-31 19.20 19.50 18.95 19.48
2002-01-15 19.48 19.85 19.38 19.44 2002-02-01 19.30 20.55 19.15 20.38
2002-01-16 18.96 19.60 18.94 19.48
$17-18? Don't think so. Effective price of crude (i.e. the front-month future) was over $19 for the bulk of the month.
Next: price in any market is not the be-all and end-all. Prices do not move for no reason, or because of ''Peak Oil'' or similar nonsense. They move because of the expectation of the mkt participants regarding future developments in the specified mkt.
The single most significant reason, 80-90% of the cause, for the price movement in crude from 2002 through April-May 2006 is this, and this only: from July 2002, the worldwide excess daily production capacity declined from 6.7 MM bbl-equivalents/day in July 2002 to -- are you ready? -- 0.6 MM bbl-equivalents/day in Jan 2006.
These figures are easily verified. I suggest you consult WTRG Economics, run by one of the finest energy mkt analysts in America (the world, for that matter -- the Russian Oil Ministry is a subscriber of his), Jim Williams, for complete details and analysis. Excess capacity has been the name of the game in crude pricing for years on end. The July 2002-Jan 2003 period is particularly interesting in this regard, btw: excess capacity dropped almost 2 MM bbl-equivalents/day in just 6 months. Why?
Demand increases? Sure, some. US ''recovery'' from a ''recession'' (hence anticipated reduced energy demand) that never happened? You bet. Supply uncertainty? No doubt. Idiots blowing up Iraqi pipe? Not at that point, but later on certainly. A new Muslim/infidel problem in Nigeria? Oh, yes. PDVSA's continuing degradation of their facilities? Absolutely. Indonesia becoming a net importer of crude and product during this period? Bet your life.
You post: The odd thing is, the price actually *dropped* during the immediate run-up to the Iraq invasion.
Odd? What's odd about it? I'll tell you what's odd: your use of the ''immediate'' period before the Iraqi campaign began on 2003-03-20. Here's the price history, day-by-day...but beginning just a little earlier than you prefer.
—— Detail history of May Crude Oil for the contract year 2003, from 01-02 to 04-01
date open high low close date open high low close 2002-12-31 27.80 28.55 27.70 28.50 2003-02-18 33.70 34.12 33.60 34.12 2003-01-02 28.95 29.08 28.75 28.84 2003-02-19 33.95 34.36 33.82 34.21 2003-01-03 29.05 29.62 28.95 29.62 2003-02-20 34.10 34.30 33.35 33.46 2003-01-06 29.50 29.50 28.85 28.99 2003-02-21 33.95 34.60 33.90 34.33 2003-01-07 28.70 28.85 28.50 28.73 2003-02-24 34.75 35.10 34.55 35.04 2003-01-08 28.20 28.52 28.00 28.52 2003-02-25 35.70 35.70 34.30 34.42 2003-01-09 28.90 29.38 28.75 29.38 2003-02-26 34.62 35.60 34.50 35.34 2003-01-10 29.30 29.40 28.85 29.04 2003-02-27 35.50 36.25 34.95 35.19 2003-01-13 28.85 29.70 28.85 29.64 2003-02-28 35.55 35.60 34.70 34.83 2003-01-14 30.00 30.05 29.73 29.97 2003-03-03 34.30 34.55 33.80 34.24 2003-01-15 30.30 30.55 30.07 30.48 2003-03-04 34.72 35.20 34.65 34.91 2003-01-16 30.80 31.05 30.65 30.82 2003-03-05 35.10 35.35 34.40 34.96 2003-01-17 30.70 31.15 30.40 30.95 2003-03-06 35.30 35.75 35.20 35.54 2003-01-21 30.70 31.10 30.48 30.96 2003-03-07 35.50 36.45 35.50 36.35 2003-01-22 31.00 31.01 30.60 30.77 2003-03-10 36.40 36.65 36.15 36.28 2003-01-23 30.80 30.95 30.25 30.46 2003-03-11 36.30 36.35 35.40 35.74 2003-01-24 30.47 31.20 30.37 31.12 2003-03-12 35.50 36.40 35.35 36.35 2003-01-27 31.00 31.05 30.45 30.49 2003-03-13 36.15 36.15 34.20 34.67 2003-01-28 30.90 31.00 30.70 30.94 2003-03-14 33.50 33.55 32.50 33.36 2003-01-29 30.90 31.90 30.85 31.72 2003-03-17 33.75 34.00 31.90 32.54 2003-01-30 31.70 32.05 31.70 31.95 2003-03-18 30.00 31.25 29.75 30.05 2003-01-31 31.65 32.05 31.55 31.80 2003-03-19 29.90 30.45 29.20 29.36 2003-02-03 31.50 31.70 31.25 31.34 2003-03-20 28.81 30.12 27.75 28.12 2003-02-04 31.55 32.10 31.50 32.04 2003-03-21 27.45 27.70 26.30 26.91 2003-02-05 32.15 32.65 31.75 32.37 2003-03-24 28.00 28.90 27.60 28.66 2003-02-06 32.75 32.75 32.35 32.40 2003-03-25 29.10 29.70 27.80 27.97 2003-02-07 32.70 33.20 32.60 33.13 2003-03-26 28.50 28.95 28.30 28.63 2003-02-10 33.10 33.10 32.45 32.60 2003-03-27 29.70 30.45 29.35 30.37 2003-02-11 32.68 33.35 32.65 33.27 2003-03-28 30.30 30.85 29.85 30.16 2003-02-12 33.42 33.55 32.85 33.35 2003-03-31 30.75 31.30 30.35 31.04 2003-02-13 33.70 33.95 33.55 33.92 2003-04-01 30.45 30.60 29.58 29.78 2003-02-14 33.95 34.10 33.50 34.04
As is readily apparent from the table, crude ran up a tasty little 25% from the first of the year until it topped on March 10th, fully 10 days in front of the beginning of the Iraqi campaign. Conspiracy? Nothing of the sort.
Markets learn. The mkt participants were well aware of what happened to crude prices the last time a war kicked off in the Muddle East (no typo). The very day of Schwartzkopf's invasion, crude prices fell like a rock (and US bonds and 10-years, and Eurodollars, went crazy to the upside). Clearly, this was going to happen again to some extent when this war kicked off...but markets learn, ok? Markets are an anticipatory discounting mechanism of price...and the participants, knowing the past, were -- guess what? -- anticipating future developments by starting to sell crude ''early''.
And they were dead bang right, too.
There's not enough time to go through the rest of your post in detail, except to note that you are exactly right on one point: natural gas isn't crude. Natch prices have been drug by the heels by crude prices for about 2 years (hint: it's called the ''BTU spread''). This effect was disguised to a great extent by the one-off hurricane season in 2005, and the natgas bulls have in their turn been strung up by the heels by insisting on being long -- VERY long in Amaranth's case -- in what was and still is a dead bear mkt.
Your limericks are very good, and thank you for them. Your analysis of crude pricing, and energy pricing isn't nearly so good. Stick with the limericks.
FReegards!
Thank you, and my apologies for being clumsy.
I'm glad of any corrections: in fact, I explicitly stated I didn't know if the spot chart price I found was the best source--and your post below, as well as the discussion of buying spot plus a staggered set of futures contracts, is very useful.
But I won't have time for a couple of days at least to take a good, head-scratching look at your post in detail, either to digest and learn what I can, or to clarify where you misunderstood me (it's been known to happen, you know...), or to say, "Aha! You're trying to pull one over on me!" :-)
Cheers!
I agree and disagree. One of the reasons crude prices fell like a rock when Schwartzkopf attacked was that US / coalition forces completely kicked ass on Iraqi forces--it was a great maneuver to go completely *around* Iraqi lines rather than slogging it out. :-)
I agree the markets "anticipated" a similar occurrence in the latest Iraq War, but the outcome was not *guaranteed*.
$17-18? Don't think so. Effective price of crude (i.e. the front-month future) was over $19 for the bulk of the month.
Point taken, BUT...$19 is still an *awful lot* less than the $70-plus we saw earlier this summer. :-)
Prices do not move for no reason, or because of ''Peak Oil'' or similar nonsense. They move because of the expectation of the mkt participants regarding future developments in the specified mkt.
My point was not attempting to do a month-by-month matching of the futures contracts with external events--but rather to show that at some point "any news would do" to jack up prices. And the comments about "$100 / barrel" or "$262 / barrel" which I gave hypertext links to near the bottom of the article, sure looked like speculators trying to drive the expectations for oil prices ever higher so that they could make out like bandits.
One or two other points -- I agree that anxiety over excess capacity could drive prices, but...!
Bill Clinton opened the US strategic oil reserve back when gasoline was only $1.59 or so a gallon. Presumably, Bush 43 could do the same. Some pundits suggested he do just that to temper prices.
Also, in terms of expectations. Another thing that happened is that (IIRC) oil companies greately curtailed exploration in the Bill Clinton era of $10-$20 / bbl crude. With prices up over $60 / bbl, not only did exploration begin again, but a number of alternatives (shale oil, coal, even nuclear power) began to be looked at. Not all of those are cost competitive with oil at $30/ bbl, or politically feasible.
When and how the alternative energy sources come on line, and how that interacts with expansion of reserves due to exploration, will be very interesting to watch, in terms of its effect on oil futures going forward.
Again, thanks for the correction; but for my thesis, I was not doing detailed analysis of the numbers to correlate on a month-by-month bases; just trying to show an overall trend, and a disconnect between prices and the causes normally given in the MSM.
(What do you know, I answered before going to bed anyway.)
Cheers!
You *are* a trader...
I agree the UN f*llates deceased canaries, or worse.
And your *Time and Timing* looks really cool: I used to do time series analysis on retail data, so I'm rather interested in mathematical modeling of seasonality, etc.
I'd ask more about your product but it'd probably involve you having to give away trade secrets :-)
Cheers!
I wanted Time&Timing, or its equivalent, back as long ago as 1975 when I was a broker. The company (short-sighted clowns!) would have no part of it, even though I and two other chaps offered to develop it on our own time.
No commercial advert here, but frankly, T&T is one of the most useful data products ever developed for mkts, and is becoming more useful still every month.
So ask away -- maybe I'll get a good idea for T&T from your question(s).
Thanks for the kind word about the site, too!
Yep. And that staggeringly stupid effort at a clumsy mkt manipulation affected prices for, what?, 3 days? Five? No more than a week, if that. I'll look it up, if you like; ought to be a cinch.
Which adjective would you like to describe Xlintoon's ''genius'' move here? Wrong-headed? Short-sighted? Venal? Incompetent? Economically illiterate (wups, sorry, that's an adjectival phrase...no cheating allowed).
I'll go for 'All Of The Above' for $1000, Alex.
I'll take "symbolism over substance" for the Daily Double, Alex. :-)
(Give me a day or two to get my head cleared up, and I'll Freepmail you a couple of the questions on that T & A T & T site.
Cheers!
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