Posted on 04/20/2006 1:17:48 PM PDT by NYer
Capital movements due to fears over a possible US-Iran war, financial speculation or market meltdown are driving crude prices upward.
Milan (AsiaNews) – Capital movements on commodity exchanges, not low supply are pushing oil prices upward. Brent crude has reached US$ 74 a barrel because of lowered refinery use and a backup in crude inventories that has left many a super tanker waiting to unload. Oil storage has become a problem since facilities are full in the Persian Gulf, Europe, the Americas and even Asia. Even Israel, which built huge embargo-busting oil depots to allow the country to survive every contingency, cannot store more oil. The same is true for South Africa which inherited vast oil storing facilities from its former apartheid regime and now readily leases out its terminals in Saldanha Bay through its national oil company PetroSa.
Yet, if US summer demand for gasoline and energy thirst in Asia, especially in China, are likely to punch a hole in supplies, why are large quantities of oil going unsold or not being stored, and prices not dropping? Oil prices are rising because investment funds are pouring liquidity into commodity exchanges trading in oil. This vast flow of capital needs an explanation. There are in fact three possible reasons to account for the situation.
First, it might be a speculative surge that will quickly drop. Secondly, it could be that some financial circles have insider information concerning US government intentions and military options towards Iran—this might explain rising gold prices now at US$ 640 per ounce. Thirdly, it might finally be that many financial groups are investing in commodities like oil to cushion themselves against a possible, 1929-like meltdown of the international financial system. Symptomatic of the danger is the dismal state of General Motors, the major US carmaker, and the potential impact on US financial institutions of further interest rate hikes.
We are taking it in the...
We sure get a lot of conflicting messages about the oil situation. Just yesterday I heard refineries were still below normal because of Katrina. And lower because of switching to spring/summer fuel mix. I have a hard time keeping up.:)
Brent crude has reached US$ 74 a barrel because of lowered refinery use and a backup in crude inventories that has left many a super tanker waiting to unload.
Why would an oversupply result in crude prices going up?
Or the hedge funds decided to make commodities a new place to park part of their dough.
Will it be a permanent policy or temporary?
I think he meant "despite"
I suspect that part of the price rise is a massive amount of spec money coming in from somewhere. Prices usually rise this time of year (it is shut down time for the refineries), but this is a bit nuts. Storage is getting limited.
It is because they say we don't know what tomorrow will bring. The price to replenish the stocks inevitably will be higher.
How much did this puke get at retirement? Several hunderd million?
If this just occurred to you, you've missed your Weekly Reader. Last Monday's inventory report also reported over one million open interest contracts for crude, 2 oil and gasoline. The Funds are involved in a very big way.
Maybe it depends on which refineries are involved.
Huh? Less demand be refineries would cause prices to fall.
be=by
Good question. I have no clue.
I think the market is anticipating a shortage due to an Iranian War - something that is inevitable, failing a popular revolution - which is unlikely to succeed without our active involvement.
Perhaps the rise in oil prices is collateral to the change in Russian, Chinese, and Indian economies towards more capitalism.
Well, there goes the supply and demand argument. Despite the libs screaming about the oil companies, it's fairly obviously we are getting stuck by the oil traders. Is there any kind of watchdog activity on these shadowy figures?
Standard Oil all over again, just now its Hedge Fund and Futures Traders bleeding the public dry.
Not really. There is a lot of spec money involved, and commodity prices don't follow supply and demand curves all the time. Part of it is that everyone expects the price to rise, so it does. Doesn't matter if they are looking for tank space to store the crude, the price will still rise.
When was the last time you filled up your car at the local refinery?
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