Oil prices will recover someday if for no other reason than you're talking about a finite commodity. But as to the reason they collapsed this time around, that was the removal of speculation - speculation primarily driven by the Fed.
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- Thread starter gwb-trading
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Oil prices will recover someday if for no other reason than you're talking about a finite commodity. But as to the reason they collapsed this time around, that was the removal of speculation - speculation primarily driven by the Fed.
Nope, prices have fallen because high production has continued in the face of falling demand. I'll mention that I do agree speculation is part of it, but today that's a small fraction.
Falling demand, eh? That chart you posted to support your position doesn't show falling demand (higher highs, higher lows). Unless you're talking about demand over the last few weeks (which occurred just as briefly two other times in your chart - when oil prices were at record highs)!
Here it is again, in case you've forgotten about it. And let's also not forget that your demand for Q1 2015 is estimated in this chart. Remove that and there's no real falling demand, just forecast falling of demand (which, again, has diverged from supply twice before on your posted chart with no effect on price).
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I love it when you hit these guys over the head with logic, but I love it even more when you clobber them with sarcasm! But mostly I love the way they just carry on anyway as if you weren't there. Or sometimes they take a little swipe at you, as though you were a gnat. And then they just go right on down the same ridiculous path with the same crazy statements and the same absurd arguments.
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Some of the more entertaining reasons for oil dropping suddenly in price are: 1. the U.S has worked out a deal with the Saudi's to teach Putin a lesson; 2. The alternative energy boys are starting to threaten the petroleum industry. Time to put solar out of business; 3. QE did it!; 4. Jay Leno has put all but one of his cars permanently on blocks.
(Richter, Now that you've ruined the fun by letting slip that demand failed to keep up with rising supply, I suppose I won't be any more of a spoil sport by mentioning that the dollar has appreciated and oil is priced in dollars. I'm not going to give them the satisfaction of letting them know that the Fed really did do that part. I want to keep it as a secret for now what the price of oil in Euros has done. I may use it on them later if the occasion arises.)
(Richter, Now that you've ruined the fun by letting slip that demand failed to keep up with rising supply, I suppose I won't be any more of a spoil sport by mentioning that the dollar has appreciated and oil is priced in dollars. I'm not going to give them the satisfaction of letting them know that the Fed really did do that part. I want to keep it as a secret for now what the price of oil in Euros has done. I may use it on them later if the occasion arises.)
Funny, because that's what most of us here think about you.
First, it's Ricter. There's no "h".
Second, please show us a chart where demand has been falling - because "Richter's" didn't seem to.
Third, while the dollar is certainly a driving force in all commodities, are you trying to pin a 50% drop in oil prices on the dollar? The dollar is rising as a result of the end of QE (and other countries taking up the baton). The dollar story is likely to continue for the better part of 2015, if not beyond. The oil story will long have played out by the end of the first quarter.
If you can read my post a tad more carefully, you will note two things: 1. I did not say, at least not in the post you are responding to, that demand declined. (I think Ricter may have said that somewhere.) I made a very carefully worded statement and tried my best to spell everything correctly, mainly for your benefit. What I said was "demand failed to keep up with rising supply."
In responding to another of your posts, in another thread, I posted for your benefit the charts you're now requesting. Apparently, you inadvertently missed my response response in the other thread.
Here is where to find the charts you want. http://www.elitetrader.com/et/index...d-markets-as-usual-want-the-oil-truth.288239/
If I can be of further service to you, please do let me know.
I apologize for not seeing that post. Between the resurrection of threads long dead and the discussion of the same cheerleading for the Fed and the economy, I often skip what amounts to the same droning over and over again. My bad.
Regarding that chart you just referred me to, I fail to see where demand is pointed out on it. All I see is a chart on supply. Ricter's chart, however, shows demand and supply rising about the same over the last 6 year period. Sure, there are a few divergences that occur, but the divergence on his chart that occurs in Q1 of 2012 looks like the same divergence in the forecasted demand for Q1 of 2015, and that didn't knock the price down from the $100 mark back then. Why is it different this time (according to you)?
The rate of increase in demand is slowing, total demand has continued to rise, because some economies are "emerging", and because the population is growing. But as piezoe clarifies, supply is well in excess of demand now, and has been since late 2013. We expect oil prices to recover when some shale players get shaken out, (edit: and economies abroad improve), but even so oil demand growth will slow with the growing portion of power generation shifting to natural gas, fuel efficiency standards, production technology exports, etc. While the fraction of all energy speculation worldwide that is done with "Fed money" must be >0, it's small and has been for a long time. Your chart correlations, QE announcements and the stock market, are (were) both being driven by business sentiment and news.