Why are oil prices so low?
- Thread starter Laissez Faire
- Start date
Laissez Faire,
Oil and Oil related stocks as a whole have a strong correlation to each other.... here is the Oil and Gas exploration and production ETF (XOP) plotted above light crude ($WTIC) although the correlation is not perfectly correlated it is mostly positive.
Oil and Oil related stocks as a whole have a strong correlation to each other.... here is the Oil and Gas exploration and production ETF (XOP) plotted above light crude ($WTIC) although the correlation is not perfectly correlated it is mostly positive.
Consider reading this...
http://www.economist.com/blogs/economist-explains/2014/12/economist-explains-4
http://www.economist.com/blogs/economist-explains/2014/12/economist-explains-4
I'm trying to help. I have no why you transitioned into dick mode. I gave you a simple answer. You rejected it and wanted proof. I've spent the better part of 12 years on this site helping people. I'm trying to share my experience. You want a simple answer where there isn't one. Everyone on ET wants a "simple" answer to complex questions. Complex questions have complex answers. Has nothing to do with having a PHD or studying math. If you want to believe stat oil trades with WTI or Brent, then by all means believe that. I simply stated I would not base my decision to enter an oil stock based on what the price of oil is doing. I wish you luck.
$15?? I don't think so. I have always said fair value is about $30-$45.
Speculation brought prices that were unrealistic and now were finally seeing real pricing of oil however the damn gas stations are still keeping prices above $3.00
I saw one gas station at $2.88 for cash only. Credit cards they wanted (get this) over $4.00. Should have taken a picture it was so unbelievable ...I said to the guy gas prices are down over 30% and you still have $4+ gas. ...he said talk to my boss about it...
Still greed in the oil and gas sector. I hope it collapses and consumers can start getting the benefits after 10+ years of this over valued commodity
Oil prices are not low, they were extraordinarily high due to speculation. Its reverting to the mean now that the large specs (hedge funds) are getting flushed out. These guys were obliterated and I think they will not be back any time soon, this bodes ill for oil producers because they were only able to hedge their production above $80 due to all these suckers buying.
What was the basis for speculation in the first place? My reasoning was the anticipated global economic recovery narrative pushed by forecasters, central bankers, and TV talking heads...but more evidence contrary to the narrative has been coming to light as of late...
Also, I don't buy the correlation evidence - if you stretch any time series long enough, everything is pretty much correlated to one another and falsely yields a high R-squared - But the ebb and flows in between aren't captured and it creates a conditional bias in the regression analysis - meaning you miss out on short-term trading opportunities...
That being said, correlation analysis is still being used by professional funds - I have colleagues that utilize them, but they are for diversified portfolio worth billions and these funds generally don't have the freedom to trade the short-term ebb-and-flows due to liquidity constraints. So they rely on a more systematic approach (regression analysis and multi-factor APT models) to determine their asset weightings over a longer time horizon.
That being said, correlation analysis is still being used by professional funds - I have colleagues that utilize them, but they are for diversified portfolio worth billions and these funds generally don't have the freedom to trade the short-term ebb-and-flows due to liquidity constraints. So they rely on a more systematic approach (regression analysis and multi-factor APT models) to determine their asset weightings over a longer time horizon.