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15248Re: [LandCafe] Re: 70% of oil price is speculation

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  • Jock Coats
    Feb 28 6:01 AM
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      On 28 Feb 2013, at 13:58, "k_r_johansen" <kjetil.r.johansen@...> wrote:

      >
      >
      > --- In LandCafe@yahoogroups.com, "Scott on the Spot" wrote:
      >
      > >
      > > As for empirical proof, I toss out, again, that oil was $147/barrel in
      > > the summer of 2008, and just $35/barrel only 7 months later. Demand did
      > > NOT slack off by 3/4!!! We would have been living in unheated caves and
      > > bicycling to work if it had...if there was work to go to at all. No,
      > > this was a result of speculators being forced, or in some cases,
      > > voluntarily, cashing in their long positions in the price-setting
      > > futures market, selling their contracts, in other words, or even
      > > shorting them. That is what speculation is.
      > >
      >
      > A 3/4 reduction in price of oil-futures, doesn't mean a 3/4 reduction in demand does it? Prices in the final consumer market didn't see the same fluctuations.

      We'd also need to look at significant off-market business in the period. For example last year there was a period of negotiation leading to the loaning to the US of nearly all the UK's strategic reserves (around the time of the Deepwater problem when production was being affected). This would rapidly, I'd suggest, dampen both spot and futures markets quite significantly, knowing that the world's largest consumer country had sourced reserves off market. It would quickly be reflected in wholesale market prices.

      Jock



      >
      > Kj
      >
      >

      --
      Jock Coats
      Warden's Flat 1e, J Block Morrell Hall, OXFORD, OX3 0FF
      m: 07769 695767 skype:jock.coats?call
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