- A BARREL OF CRUDE HAS GONE UP 50% SINCE JANUARY.
- NOTHING ELSE HAS.
- AND THE DOLLAR HAS OT GONE DOWN 50% IN RELATION TO ANY CURRENCY.
- SO WHY - WITH DEMAND FALLING - IS OIL BECOMING MORE EXPENSIVE?
CHART ONE - THE YEAR:
CHART TWO - THE LAST SIX MONTHS:
CHART THREE - THE LAST THREE MONTHS:
NOTE THAT THE HUGE RUN-UP IN PRICES BEGAN WHEN THE YEAR BEGAN - AS THE SURGE HAS CALMED IRAQ AND AS OIL DEMAND ACTUALLY DECREASED GLOBALLY.
AND ALSO NOTE THAT THE FIRST WEEK OF EACH MONTH IS WHEN THE PRICE OF CRUDE JUMPS TO A DEGREE WAY UT OF PROPORTION FOR THE REST OF THE MONTH.
Since January, there has been no "news" which justifies the enormous increase in the price of crude oil.
There is no "news" in the first week of each month for that last six months which is responsible for the increase in the price of crude oil which occurs - like clockwork.
I think this shows that the run-up in the price of oil is the result of a programmed effort to run-up the price - perhaps funded by OPEC as much as by fund managers with hedge-programs which tell them to switch from stocks when they decline and into commodities, especially oil (especially when it rises!) ---- a self-fulfilling prophecy.
The make these huge stock sales and then huge oil buys in the first week of each month - and this sets the tome for the rest of the month - makes the prophecy and fulfills it.
Some trading regulations might be above to curb this in a way that makes the price of oil more realistic, less a product of investors and more a product of users.
I am not suggesting price controls or regulating a market that is now free of regulations. These markets have plenty of regualtions already. I am suggesting new updated regulations - as I think the current "rules of the game" now make the "score" unacceptable. The bizarre and macroeconomically bad results generated by the current market rules prove the current rules out-dated.
If you constrain the ability to ship crude oil, you raise the price of oil. Iran has corralled about a dozen VLCC off their coast, each full of oil, and each just riding at anchor. No ships, no delivery -- yields high crude oil prices. There are not a lot of VLCC just sitting idle in the world, it takes just a few not working to constrain supply.
ReplyDeleteWe now learn that Venezuela and Cuba are supplying help in idling the VLCCs and in funding the terrorist.
I think Iran is testing the waters.
it's not umcommon for oil stocks to be cyclical in nature. run ups start in dec-jan and last until jul-aug. then it drops until nov.
ReplyDelete03, fund money in commodities ahs grown from 15 billion to nearly 300 billion.
ReplyDeletethis is additional money chasing the same amount of goods: that causes price inflation.
it has skewed the market out if kilter.
it is worse than irrational exuberance.
we need to get more reg on that money because it's skewing the price in no relation to the commodities actual use.
oil is also for burning, not just buying and selling!