Are you insinuating that the market is rational?

I think, although underlying tendencies in expectation of future supply meeting projected demand, as well as speculation, drive up the price overall, investors and others have a hard time making up their minds up what to think about it all.

We are heading for a fluctuation-period well before we will see the real effects of a peak.

I think the "normal" fluctuations have just gotten so big that any change of less than $1/bbl doesn't really mean anything.

The various news outlets are putting the blame on the end of summer. Traders suddenly noticed that Labor Day - the traditional end of the summer driving season - is less than two weeks away. So they bailed out of gasoline, which sent oil lower.

Yes, and anyone with half a brain brought up every drop that was dumped. The sell off only lasted a few hours befor the oilers pumped the price back up.

Current price $65.50 = bargain

Yep this is one unstable market.

The market has hit a high today of 66.20 and a low of at least of 65.25 ( I know it went lower ).

That is a big intraday swing.

Isn't the purpose of a futures market to be used as a hedge against price volitility? That is, not solely as a vehicle for speculation? Doesn't volitility in the futures market compromise its usefulness in this regard?

What will be the consequence of greater volitility on oil consumers? I don't mean you and me at the pump and all that bullshit, but the companies who have to budget large oil purchases into large scale project plans. Doesn't this effectively mean a scaling back in economic activity on its own, separate even from actual price?

Seems to me like volitility will precede permanent price movement, and that volitility on its own is something to fear.

I think that the volatility is fear.

When the price swings a dollar in a day it shows that there is allot of uncertainty in the market.

People fear the price may go higher, people fear it may go lower. It shows no one has a real good handle on things.

I mean literally tomorrow we could hit 75 or 85 if the numbers come back that there is another big draw down on gas and a major disruption in Venezuela or SA. People would freak.

yes, i think that fear plays a significant role in the market side of things, and leads to volitility - well a combination of fear and greed.

It is interesting to try to divine the mood of investors through price fluctuation, but it is also inherently inconclusive. I feel like there are always doubts as to what exactly it means, if anything. It seems to me like there is a more fundamental analysis of the effects of that fear on the economy.

Speculators are necessary to provide liquidity in a commodities market, but they are secondary to ther real consumers of the commodity. That is what (at least superficially) makes the market different from pure gambling. But as the time horizon in that speculation moves from long term to short term, as fear and greed become more intense, the value of the market to the real consumers of the commondity has got to erode to a degree.

The value of a futures contract for a refinery, say, is that you can lock in a future price while you built out the infrastructure for the refining process. So, for the people holding the contracts to term, they serve a real funtion in terms of doing business. But as the contract prices go all haywire, the consumers have to jump into the same stew as all of the speculators. This might cause them to scale back the scope of their projects.

This also makes me believe that a shortage in crude oil could lead to a drop in refining capacity. Since refineries are capital intensive projects, financing them becomes more difficult in a volitile market.

Now, can anyone tell me if I am overstating this issue?

Natural Gas 09:27 pm
$10.01 $0.24 543 (vl)

I should have added a link---321 Energy has an excellent running chart showing current NYMEX energy prices


http://321energy.com/

As best I can tell, natural gas prices are the highest ever for the summer.

I am glad that my wood burning insert is being installed this week.

Bah! I want more companions for my misery. I rent with three other guys a poorly-insulated house that's heated by natural gas, and the price has gone up, what, 50% since last winter? It's going to be a cold December for me

I guess you will have to cuddle together for warmth.

Well, the righteous doomers on this site can start panicking again...
Oil prices currently 66.31

Sgs-Cruz

Start to insulate and plug up draft holes etc for the winter. There is a lot of small things you can do to lessen the problem of high winter bills. Plastic on windows will do a lot. Close unused rooms in winter time. Etc.

Use your head as to how to keep the heat and the cold out. It can be a fun project for the weekend and will make you money.