So what is with the initial post, phony or what? Bloomberg has the price of Brent Crude, August 14, New York time 20:10, is $113.68; WTI Crude is $114.70.

$113.680 on bloomberg. $50 discount, nice.

Wouldn't it be ironic if it was a screw up in the wrong direction. Brent spikes to $163/bbl...

I've grown weary of trying to find daily price fluctuation discussion here so I've created this thread for that purpose. Mods please sticky it.

So, I've been marveling at the constant slide of crude prices this week. Looks like about a 10% decline in the price of crude just this week alone.

What are the factors that are bringing down the price so far this week?

I believe we are mostly seeing the average joe jumping out over fear that the price will drop even more. Most of the average joe types dont do their research very thoroughly. Its hard for me to see oil continuing down to much more because of what I know about supply and demand.... But guessing why people are having a sell reaction to things is anyones guess.

If I were to hazard a guess as to it's fall it would have to be the combined effect of the percieved "weakness" of hurricane gustav in failing to completely destroy oil infrastructure, combined with the RNC and their ideas of Drill here Drill now. Which will somehow be able to make up for the falling supply that they conviently fail to mention. The focus is on local political happenings and not on geopolitical ones. But that is just my faceless opinion.

ZebraDog, what seems really weird is that oil is actually lower than it was before the hurricane hit, and real damage WAS done... at least in terms of supply disruption. So you would think that the price would climb... or maybe hold... but dropping is kind of great too I guess? I think this shows us that the market is very confused about pricing oil. Price it fairly (at least $100 or more) and the “our” world goes out of business pretty fast. Price it cheap and the world goes out of business much slower and mostly in parts of the world "we" don't really care about first. It seems like the markets are really struggling with the reality that unless oil really starts to climb and stay historically high FOREVER we are headed off the tracks.

I have been backing the truck up on non-integrated oil companies like CNQ.TO and SU.TO as they are all down... I think of this as a great buying opportunity if you thought you missed the boat in the 140's

As a non trader I am surprised in the time lag between supply related news and the price adjustment it creates. I would think that people that make their living trading oil futures would have a better handle on supply data than they appear to. Ship loadings and arrivals are public info but what about oil flowing through pipelines ? Are actual deliverys reported in a timely manner even by Russia or other rogue states? How much uncertainty is their in the figures they are trading billions on? Waiting for quarterly government reports seams a sure way to lose your shirt.

I believe a lot of what your seeing with oil's fall lately is de-leveraging. The longs are getting out because a lot of them still make money selling at this point If they have been in for long enough.

The banking/credit crisis has a lot to do with this. Oil rose astronomically and its one of the few places left where you can sell and cover losses elsewhere. It wont last much longer and fundamentals will always come back and do the driving at some point.

The market is still in some form of dysfunctional mode, but it wont go on forever.

I keep hearing rumors that a large commodity hedge fund is going under and has been selling its positions.

retiredguy said:



Several hedge funds have blown up lately, also the Bank of China is in trouble and so is China.
HONG KONG — China’s central bank is in a bind.
NY Times

The US is retracting fast, and an F&F collapse is a real possibility. Delinquencies on prime mortgages are up 400%. Airlines are supposed to lose $6 billion next year, auto is going down the tubes and there will probably be one bunch of banks collapsing after the election. The economy is now held together with chewing gun and baling twine.

Europe is probably going to go into a recession in the next quarter, if She is not there already.

The traders are probably thinking that without an economy you don’t need oil. They still don’t grasp the significance of PO. But in time, they will!

I have always maintained on this board that the high priests of capitalism (and I speak here from the perspective of a Marxist) will not kill the goose thats laying the golden egg, namely the system of capital.

I suspect that the geological red line for oil will hold at $100, as a retracement stop. However, I suspect that any number of ruses will be brought to rein price in where it exceeds that fixed red line. Wars, talking heads, the destruction of demand, especially on the peripheral margins of the capitalist empire, the use of clients such as Saudi to replenish the market etc, etc will be used to ensure that the last drop is used at the maximum discount, all the while, with the nurturing of hope that an alternative will come along to save the day.

I have also commented that its my view that 50 years will have to pass before we reach the point where the system fails to reconcile dwindling resourcing with its needs to the degree that it implodes. There is still an awful lot of slack in terms of the fixed nature of the demand profile of oil given that apart from the West, no other hemisphere has yet embedded the resourcing demands of capitalism systemically. Consequently, the demand for commodities has yet a ways to go before assuming a global profile of the Western magnitude. In the context of this yet to evolve profile for demand exist mitigating offsets such as renewables.

I have two basic thoughts on the week. There was obviously a huge price drop on Tuesday. I think that was a reaction to two things 1. Gustav coming in softer than anticipated and 2. The perception that the oil industry has done a better job of weather proofing itself post-Katrina and is now less susceptible to storm damage.

The good news about the drop on Monday is that once it dropped to $105, it generated huge buying pressure that sent it right back up. It still hasn't violated Monday's low. I'm wondering if the opening gap on Tuesday wasn't an exhaustion gap. So, I'm still of the opinion that we're near the bottom of this. I'm not convinced enough that I'm going long yet, but that's what I'm thinking.

Feeling the same way here SPG. After I took a good bit of my oil ETF's off the table back in March, I'm springloaded to go in again, even bigger this time.

Higher highs, higher lows. I think thats going to hold true. The PO cat isnt even out of the bag yet either!

For what it's worth, I agree that the price of oil is inevitably on the long side of the trend curve for geological and long term demand reasons.

However with the supply/demand profile of oil still largely hemispheric and with the bargaining dynamics for the commodity being a function of the Western capital markets, it will, IMO, be subject to volatile retracements as the predominant user of the product, the West, uses that bargaining advantage to talk the price down.

We see that today in a range of measures, all designed to keep the independent supplier, invariably in the non-western hemisphere insecure. Measures such as the securing of client suppliers, threats of abandonment to alternatives, the threat of force, Western regulation, talk of demand destruction (true to an extent in as much as the periphery of global capital can be sacrificed without risking the integrity of the global structure) etc. etc.

The long side of the oil curve is perhaps a classic example of an unequal market and consequently a highly risky trading environment for the small trader, subject as it is to covert intervention.

Talk of sovereign economic blocs such as India and China tends to cloud the dynamics behind the bargaining for the product and IMO, is either disingenuous or premature in failing to take account of the fact that both these dynamic economies are integrated within Western capital to the degree that their continued resourcing is a function of Western capital and not as sovereign as we are led to believe.

The crunch will occur when these two economies are sufficiently independent of the West in terms of sovereign demand. That time is decades away and will converge for the "perfect storm" of resource conflict.