What does “recover” mean? Reach ridiculous prices based on the greed of 100 traders on the commodities exchange and some powerful countries and people.
“What does “recover” mean? Reach ridiculous prices based on the greed of 100 traders on the commodities exchange and some powerful countries and people.”
Traders and speculators reduce the price of oil by removing the producer’s risk. Let’s say you’re an oil speculator. Assume the price today is $60 per barrel. You decide that the price in January will be $100 per barrel. You offer to buy 100,000 barrels at $65 per barrel for delivery in January. The driller now has a guaranteed price of $65 in January so he can arrange financing and other deals based on this guarantee.
Now, two things can happen. Come January the price has gone up or down from the $65 you agreed to pay. If it went up you sell oil that did not exist for sale prior to January at the higher price and pocket the profit. Or, you sell your oil at less than $65 and accept the loss.
At no point did your speculation affect the price. The price is set by market conditions.
Now, Saudi Arabia, which has the world’s lowest cost of production, has set the market price as low as possible. This was to force Russia to abandon its support of Syria and to hurt Iran (which has a much higher cost of production) for their support of Syria. Saudi Arabia is doing this so they can eventually build a pipeline through Syria to the Mediterranean. This will hamper Iran’s efforts to affect SA’s production once Iran becomes a nuclear power. At which point Iran will be able to close off SA’s access to the sea lanes with impunity.
“What does “recover” mean?”
Being sold over the cost of production comes to mind.
There is a glut, but it is only 1% and there was a massive slow down in drilling.
There will be a massive uptick as the glut subsides.
“What does “recover” mean? Reach ridiculous prices based on the greed of 100 traders on the commodities exchange and some powerful countries and people.”
When the prices gets up to where we can drill and complete and still make a profit. Many are still drilling but are waiting on completions.
If all it takes is “greed” the price would never have gone down.
Supply up, price down.
As a result a lot of drilling rigs have shut down due to non-profitability. How long do you keep working when you aren’t getting paid anymore?
The rig shutdowns will eventually lower the supply, leading to higher prices. This has happened in the energy industry and every industry throughout history.
It’s called supply and demand. They used to teach how it works in schools, but not anymore. Now they call building wealth “greed” and achievement “privilege.
By “they” I mean socialists. You’ve been well educ....I mean indoctrinated.