Yesterday’s run-up was a short-term volume-related blip.

Doesn’t mean oil won’t be heading higher over the much longer term, tho.

Fun, eh. It’s a nice trap we’re in. We need to get off oil to break this link.

ehyuh.

what day this week should I fill the tank?

I’d fill mine today if I had the money. Heh.

Nobody knows how low the market might go, but I’d expect it to go lower until Congress announces a solid plan that makes ‘em happy. And, if oil keeps going up (inversely to stocks), then that means it’ll go up ’til the bill comes out and then might begin back down a bit. But, you know how slow oil prices go down, so don’t bet on it being a crash.

There clearly still needs to be anti-speculation legislation to stop this oh so precious and highly influential price from booming & busting so regularly. It needs to relate much more to the actual user’s needs.

Crap. Higher prices at the pump _again_.

I guess the good news is that the RW either won’t be able to artificially lower gas prices between now and the election or if they do, it will be very obvious that’s what’s going on (since we’ll be able to compare/contrast crude prices vs pump prices over a similar range).

Not much of a silver lining.
Talk about insult to injury for ordinary taxpayers! *spit*

FunnyD

Check out muckycasy overule immigration court to send mali woman back for genital mutilation

1984

So you can have a war in an oil rich region. This can drive up prices because of either fears of a supply decrease or because the supply does decrease. But at some point the war ends or the production is made up elsewhere. At this point, the oil price should return to at or near its baseline. In reality, this only happens this way sometimes. Political considerations can drive the price down even when there is an expectation that it should rise. So for instance after 9/11 with threats of war on the horizon, the price actually fell. Why? Because a lot of oil producers decided to show solidarity with us.

Now some pressures on price can be long term at least potentially. China is often cited but if you look at world demand China has not had, so far, the big impact predicted for it. Why? Mostly because there is a certain elasticity in demand. Rich countries can conserve some. Third World countries can be bid out of the market. The result is that China’s impact on price has just not been very significant. Maybe it will in the future but China is not an explanation for oil price changes in the last 4 years.

So that leaves us with speculation. And speculation has been tracked over and above supply-demand since 2004 when the year end to year end price increased by a third, and unlike the predictions of supply-demand models, never returned to its baseline.

A $40 turn around in just a few weeks should be a clear indication that speculation is a potent factor driving oil prices. There is no evidence that $80 to $90 was a floor. As far as I can see, it is just a made up number. The only evidence that there is is the 2001 baseline plus inflation of around $50. These are numbers that are straight out of the futures markets, the currency markets, and the numbers on supply and demand that anyone can look by going to the EIA site for oil and the Fed site for currency.

Also of interest is the over 3 point drop in the dollar index.

Looking at oil vs dollar index it appears that 1/4 of the oil increase is due to dollar waekness. Look for more dollar weakness, it’s the flip side of the commodity price coin.