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Grizzly Weinstein
sea_gaagii
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April 2009
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Grizzly Weinstein [userpic]
Them Futures Guys

Remember when Oil was $140 a barrel! Those were the days. Of course it was all the fault of the 'futures traders'
WA Post - Oil Traders Subpoenaed After Price Surge
CNN Money.com - Traders manipulated oil prices - U.S.
Shadow Traders.com - More on the real reason behind high oil prices

No matter that record amounts of oil was being bought by China and India. That supplies had been disrupted in Nigeria and the Middle East. That Libya had threatened to cut output. And of course offshore production in the Southern US was still not at pre-Katrina levels.
And of course it doesn't matter than the dollar had lost just over 20% (from Jan 1st 2007 to July 2008) vs the Euro.
None of that mattered it was them futures guys.

In some ways they are right. Futures trading makes the market more efficient. The information was that the dollar was falling and would continue to do so, supply was falling vs. demand with no end in site.
If everything pointed to the price of budwiser doubling this next year, beer guzzling football fans would make a run on the market. This is not an exact comparison because the price of beer is already set - but imagine guys in the aisle fighting over the last six pack - I'll give you $20 for it! No, I'll give you $40! Remember Cabbage Patch Kids, Tickle Me Elmo, and Ebay sales of PS3 and XBox - and these were only temporary supply gluts.

So yeah, the futures guys made oil cost what information showed us it will cost. It makes the market react quickly and efficiently to information.

Today oil settled at $77.70 a barrel. The price has been dropping for the last few weeks. Oddly enough the dollar has been falling vs. other currencies the last few weeks also, there are no new supplies announced. How can this be?
Oh its them futures guys again. The crash of the American economy and global economies are happening. This indicates a slow down in production is to come (and has already started), this means in the future the demand for oil will be a lot less. Because of the efficiency of markets created by these futures guys oil is dropping now and not next year.
Yet, I don't see a bunch of articles screaming their love for those futures guys!
Where is the love!

Oil prices dropping now, puts dollars in the pockets of Americans. dollars which they previously needed to fill their hummers! They can now go buy the last six-pack of bud off the other guy before the big game or save up to bid on Ebay for that tickle me cabbage patch Xbox game that will be the hot item this holiday season!

Provided the internets still work.

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It is a complex model :)