Supply fears will keep oil price high, volatile: CIMB ["could also surge closer to US$90"]

People buying gas right now to sell later increase demand now. Prices go up.

Later on, when they have to sell, more gas is available, and thus prices do not go as high as they otherwise would.

They cannot have a real effect of the price over the long run, unless they held gas forever. The average price over the years is the same with or without futures contracts, but the curve is smoother.

Agreed, this is speculation, I am afraid most of us here on this site would hate to think there are games to be played in the fair and open market. But.... the open market is not fair when we have no choice in the matter or there is true effective monopoly. Utilities and Gas are that way. Just like the manufactured california shortage, this is going to make gas stay high and once the companies get used to the high revenue low output they will fight to keep it that way. If we save too much they will say it costs more and we will still pay the same price as we cut back.

I heard some rumblings this morning {on CNBC} from a Republican congress critter about possibly passing a law raising the margin requirement for oil futures trading. This could knock out the $10 - $15 per barrel speculative part of the price.

This is real good thinking, make it more expensive for US futures traders and companies. After all we control the market and buy 10% of the worlds oil. I'm sure the other futures traders and companies that that buy the other 90% of the worlds oil are going to appreciate our government inspired handicap. Should decrease the buying power of US futures traders and increase the price $10-$15 a barrel.

"I heard some rumblings this morning {on CNBC} from a Republican congress critter about possibly passing a law raising the margin requirement for oil futures trading. This could knock out the $10 - $15 per barrel speculative part of the price."

If a gas station owner jacks the price up 25% during a bona fide emergency/shortage it's considered gouging and against the law. If commodity traders run the price up 25% through sheer speculation it's called "Futures Trading".

Did you read the link in post #19. There is too much hedge fund trading in the oil futures. People who probably don't want nor need the oil. Just playing the momentum game.

I have noticed the price of oil has dropped over the last 2 days as some hedge fund oil traders are stepping aside now perhaps because of the uproar. Who knows, we will see if anything is done.

From the foxnews article - Right now it costs exactly $3,375 for anyone to control 1000 barrels of crude oil valued at roughly $67,000. Three grand to control nearly seventy!

One last thing I have heard about U.S. refineries is they are working towards ALL of the refineries being able to refine sour crude which takes more refining to turn it into gas, etc. This will probably be completed within 2 - 3 years. The spot price we see quoted is for sweet crude {takes less refining to make gas} Sour crude sells for around $50.00 a barrel. The extra capacity from Saudi Arabia is sour crude. Venezuela also produces this type.

Go back and read that post or information on sweet and sour oil. It may have been mine. The US can refine 2/3 of their gasoline from sour oil. The world can only refine 30% of their gasoline from sour oil and require sweet oil. Sweet oil went in decline in 2004 so there is heavy demand and it is at its peak. It will continue to be in high demand.

The cry speculation is a political agenda and if a US politician thinks US futures traders can control the world market they are nuts. Many countries have tried to control futures and none successfully. In the 1400's during the Japanese rice famine the govt. accused the traders of futures speculation took control of the market and distribution and successfully starved 14 million people.

I don't know but this is my original post about a week ago and it has been posted several times since.

There are two types of crude oil, sour oil (heavy oil) and sweet oil (light oil).

Sweet oil is preferred for the production of gasoline and is the more expensive. Sour oil is less expensive but yields less and is more expensive to refine.

Only 30% of the worlds refineries can produce gasoline from heavy oil. 70% of the worlds refineries must have light oil to produce gasoline. The US has already converted 2/3 of its refineries and they can produce gasoline from sour oil. 1/3 remain to be converted. Both SA and Venezuela have made large investments in US refineries to convert them to sour oil operations. The conversions are very expensive and cost billions.

Sweet oil production peaked in 2004 and is in decline and that is what is driving sweet oil price. SA use to produce 40% sour oil and 60% sweet oil. Today they produce 30% sweet oil and 70% sour oil. Virtually all of Venezuela oil is sour oil. If 1000's of tankers of sour oil were stacked at a refinery's door it would be useless if the refinery could only refine sweet oil. The price difference of sweet and sour is sometimes as much as $18 a barrel and has helped keep the price down in the US because of our ability to refine sour oil. However 1/3 of our gasoline must still be refined from sweet oil.

The price of sweet oil will continue to increase from supply and demand until many of the worlds refineries can convert to heavy oil. EU has few heavy oil refineries and must have sweet oil for gasoline. SA is building massive heavy oil refineries and will soon be able to export large amounts of gasoline. China's and Japan's new refineries will use heavy oil.

Of further costs to US gasoline are taxes and a government requirement to use a additive more expensive than gasoline. At the present both Venezuela and SA will supply you with sour crude oil at $50 or less a barrel and would be glad to get rid or it. Sweet oil will continue to go to the highest bidder. Speculators have little to do with the problem other than they insure that you have supply for future use.

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