Put another way, he's saying oil would be $10 a barrel if we had a command-economy that could price it at $10 a barrel.
Great!
So what?
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Oil Should Be Around $10 a Barrel: Analyst
- Thread starter misterno
- Start date
Put another way, he's saying oil would be $10 a barrel if we had a command-economy that could price it at $10 a barrel.
Great!
So what?
Quote from Trader KGB:
Nonsense.
Oil is settled physically at each expiration and all paper investors are forced to roll forward. When paper investors sell the current month to roll forward, all that's left are the physical buyers and sellers (i.e. no influence from the oil-as-an-asset-class crowd at this point). Notice oil doesn't crash at each expiration, there is ample demand for physical at the prevailing price.
The reasons we have $70+ oil instead of the recessionary norms of oil prices in the teens can be largely traced to demand from emerging markets (specifically India & China) that wasn't nearly as large in prior US recessions. Fiat currency devaluation is a significant factor as well. Gold wasn't $1240/oz when oil was $10.
Although the US is the largest oil consumer, looking at only US-metrics (inventory levels) to judge the price of a global commodity is rather folly (let alone not taking currency devaluation into account, higher oil extraction costs, etc).
Correct on all points. But remember the rule of the mob: If you don't like current prices, blame the speculators. Even if half of them are short.
Quote from Trader KGB:
Nonsense.
Oil is settled physically at each expiration and all paper investors are forced to roll forward. When paper investors sell the current month to roll forward, all that's left are the physical buyers and sellers (i.e. no influence from the oil-as-an-asset-class crowd at this point). Notice oil doesn't crash at each expiration, there is ample demand for physical at the prevailing price.
The reasons we have $70+ oil instead of the recessionary norms of oil prices in the teens can be largely traced to demand from emerging markets (specifically India & China) that wasn't nearly as large in prior US recessions. Fiat currency devaluation is a significant factor as well. Gold wasn't $1240/oz when oil was $10.
Although the US is the largest oil consumer, looking at only US-metrics (inventory levels) to judge the price of a global commodity is rather folly (let alone not taking currency devaluation into account, higher oil extraction costs, etc).
You are wrong in all sides
Futures, options of oil is settled every day not one day. If an option is expired yesterday, there is 10 more written today. So the notion of "When paper investors sell the current month to roll forward, all that's left are the physical buyers and sellers" is totally wrong, because there are new future calls, options happening every day.
I read somewhere that the paper demand is 11 times the physical demand in oil. Imagine what would happen if you ban paper demand. Oil should be much much cheaper than $70/brl
âThe economic recovery that began last year is beginning to be reflected in the rising earnings and improving credit quality,â FDIC Chairman Sheila Bair said in a statement.
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According to the FDIC, the "Economy is in recovery mode", So, soon we should have GS reports coming out saying Oil to 200 by Dec...LOL
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According to the FDIC, the "Economy is in recovery mode", So, soon we should have GS reports coming out saying Oil to 200 by Dec...LOL
I was referring to expiration settlement, i.e. contract delivery. Not daily settlement.Quote from misterno:
You are wrong in all sides
Futures, options of oil is settled every day not one day. If an option is expired yesterday, there is 10 more written today. So the notion of "When paper investors sell the current month to roll forward, all that's left are the physical buyers and sellers" is totally wrong, because there are new future calls, options happening every day.
Quote from misterno:
http://www.cnbc.com/id/38915139
The price of a barrel of oil would be closer to $10 if the commodity wasn't traded as an investment instrument, given the record-high levels of U.S. oil inventories, Peter Beutel, president of Cameron Hanover, told CNBC Monday.
He is wrong. We should get paid for getting oil.