Anyone clever understand oil prices?
Discussion
I thought one of the reaons oil shot up recently was that it was seen as a safe investment compared to stocks and shares - and yet now stocks and shares are in freefall and oil is down as well (Brent at about $86 as I type). Obviously there are about a million other factors but I'm beyond guessing now!
Anyone with a big brain who understands these things able to explain it?
Anyone with a big brain who understands these things able to explain it?
Richjam said:
No idea but I would like to know how come fuel prices are still so high considering the price of a barrel of crude was at 150 dollars at one point
Profiteering is, I believe, the technical name! In a simpler age it would probably have counted as piracy and attracted the death penalty - these days its just 'capitalism' (if you're reading this in a couple of years time 'capitalism' is what we used to call our culture shortly before it imploded!).edited for spolling
Edited by LeeME3 on Monday 6th October 21:01
LeeME3 said:
I thought one of the reaons oil shot up recently was that it was seen as a safe investment compared to stocks and shares - and yet now stocks and shares are in freefall and oil is down as well (Brent at about $86 as I type). Obviously there are about a million other factors but I'm beyond guessing now!
Anyone with a big brain who understands these things able to explain it?
No big brain but....Anyone with a big brain who understands these things able to explain it?
The threat of a world wide recession/depression drives both actual and anticipated oil use down therefore supply is sufficient and prices fall or stabilise or both.
Oil isn't a safe investment as such. You can I can't invest in oil except through shares in oil co's or similar. It's not a commodity you or I can easily buy like gold or diamonds.
The oil price peaked because global demand was high, supply was limited and the future even 3 months ago looked a s
t load rosier than it does now. Will it fall a long way? I doubt it. I will be very very surprised if we see oil below $50 a barrel in my lifetime unless someone comes up with some amazing energy generation/conversion ruse.
Does that help a bit?
Wasnt one of the reasons that it went so high was because traders were allowed to buy stocks at 20% of the price, then sold within their allotted time before having to pay the remainder, and this drove the price up?
Is this what is known as short selling?
Net result was that due to the numbers of shares trading on the markets, then supply dwindled as demand rocketed, hence driving prices high.
Is this what is known as short selling?
Net result was that due to the numbers of shares trading on the markets, then supply dwindled as demand rocketed, hence driving prices high.
LeeME3 said:
Olf said:
a lot of pretty sensible stuff
Yes, that does help - sort of answers the other post about Gold as well 'cos Gold is something you can hold and go and buy and then sell again fairly easily.Ta!
That said I agree it's a lot easier to find storage for gold bars than for a supertanker full of overpriced crude.
Davel said:
Oil goes up - fuel goes up immediately
Oil comes down - fuel stays up as long as possible
Indeed. If the oil price goes up then it is used as the excuse for an immediate increase in petrol prices, yet when oil comes down they tell you that the cheaper fuel will have to filter through before it is reflected in pump prices.Oil comes down - fuel stays up as long as possible
The other factor is the £- $ exchange rate.
The $ is strong against the £ at the moment.
Currently oil is bought and sold on the world market in dollars, so everyone needs to first buy dollars in order to buy oil.
So for us, we won't see much of a reduction at the pumps for a while.
ETA : Todays oil prices are probably for November delivery so we should see a couple pence off then.
The $ is strong against the £ at the moment.
Currently oil is bought and sold on the world market in dollars, so everyone needs to first buy dollars in order to buy oil.
So for us, we won't see much of a reduction at the pumps for a while.
ETA : Todays oil prices are probably for November delivery so we should see a couple pence off then.
Edited by Nitro... on Monday 6th October 23:14
I thought I had a fair understanding 'til recently 
The refined stockpiles play quite a large part in the price.
While I'm here thought I'd add that petrol (regular) has just dropped below $3.00 /US gallon
That's approx 4 Litres. No need to convert Us Galls to imperial, 4 litres is close enough for price comparisons.
The refined stockpiles play quite a large part in the price.
While I'm here thought I'd add that petrol (regular) has just dropped below $3.00 /US gallon
That's approx 4 Litres. No need to convert Us Galls to imperial, 4 litres is close enough for price comparisons.The whole world economy meltdown is a joke caused by the banks.
AS i understand it:
Banks loaned people more than they could realistically afford and more than properties were worth
People lost their jobs due to the american market slowing down.
They were unable to pay their mortgages.
The banks had loaned them more than the properties were worth.
The banks ended up having tons of people defaulting and not making any payments on their mortgages meaning the banks couldnt service their debts to their lenders.
Now at this point surely the banks smartest move would have been to turn to each customer who was having difficulty repaying the mortgage and rearranged it so that it was longer term and with a much lower monthly repayment so that they would still have a revenue stream.
Ok so that didnt happen. Banks stopped lending to each other and therefore the customers, meaning customers couldnt get credit couldnt buy stuff therefore keeping the economy up.
Now foreign and local banks are going t!ts up and taking down businesses and there creditors etc snowball effect.
Surely and maybe I am being stupid the simple solution to this whole fecking c crisis is for all the banks investment houses to go back to square one and start lending to each other again albeit with slightly more rigid checks on where the debts are going and what assets are there to back it up.
Now they cant be certain that anyone they lend the money to is going to pay it back and not go t"ts up. There is no way to avoid being hit by any company, bank, investment house etc going pear shaped the banks are going to take a battering and lose money thats a given.
But by not lending to each other what they are doing is making the situation 1000% worse.
The banks are basically slowing down the whole world econamy by cutting off credit which has a huge knock on effect in an attempt to avoid getting stung.
For example the bank cuts off credit to a car manufacturer due to paranioa over the market. That means they lay off staff some of whom then default on their mortgages which may not be directly be held by the bank that started the chain but will at some point affect the bank and it will take a hit due to the debt going through their books and debts that the people who cant pay their mortgage have on things like cars home equipment home improvement loans credit cards etc.
Where if the bank continues to lend even though ricsky that person still has a job and still pays all their bills.
Sadly there will be those that go under its life but if they keep lending the problem will iron itself out much sooner and easier as they wont take the world economy with them.
Its better to make less money than to make no money.
Maybe I am being simple but its how i see the situation.
AS i understand it:
Banks loaned people more than they could realistically afford and more than properties were worth
People lost their jobs due to the american market slowing down.
They were unable to pay their mortgages.
The banks had loaned them more than the properties were worth.
The banks ended up having tons of people defaulting and not making any payments on their mortgages meaning the banks couldnt service their debts to their lenders.
Now at this point surely the banks smartest move would have been to turn to each customer who was having difficulty repaying the mortgage and rearranged it so that it was longer term and with a much lower monthly repayment so that they would still have a revenue stream.
Ok so that didnt happen. Banks stopped lending to each other and therefore the customers, meaning customers couldnt get credit couldnt buy stuff therefore keeping the economy up.
Now foreign and local banks are going t!ts up and taking down businesses and there creditors etc snowball effect.
Surely and maybe I am being stupid the simple solution to this whole fecking c crisis is for all the banks investment houses to go back to square one and start lending to each other again albeit with slightly more rigid checks on where the debts are going and what assets are there to back it up.
Now they cant be certain that anyone they lend the money to is going to pay it back and not go t"ts up. There is no way to avoid being hit by any company, bank, investment house etc going pear shaped the banks are going to take a battering and lose money thats a given.
But by not lending to each other what they are doing is making the situation 1000% worse.
The banks are basically slowing down the whole world econamy by cutting off credit which has a huge knock on effect in an attempt to avoid getting stung.
For example the bank cuts off credit to a car manufacturer due to paranioa over the market. That means they lay off staff some of whom then default on their mortgages which may not be directly be held by the bank that started the chain but will at some point affect the bank and it will take a hit due to the debt going through their books and debts that the people who cant pay their mortgage have on things like cars home equipment home improvement loans credit cards etc.
Where if the bank continues to lend even though ricsky that person still has a job and still pays all their bills.
Sadly there will be those that go under its life but if they keep lending the problem will iron itself out much sooner and easier as they wont take the world economy with them.
Its better to make less money than to make no money.
Maybe I am being simple but its how i see the situation.
Hell27 said:
Wasnt one of the reasons that it went so high was because traders were allowed to buy stocks at 20% of the price, then sold within their allotted time before having to pay the remainder, and this drove the price up?
Is this what is known as short selling?
Thats futures you're thinking of, essentially trader puts a "deposit" on some oil, promising to pay the current market price for the oil in X amount of time. If the price of oil is higher than when they placed the deposit they pocket the difference, if its lower, they loose the difference.Is this what is known as short selling?
At least thats how I had it explained to me.
isn't the reason the fuel price falls slower due to the fact that the oil price is for crude, for delivery next month and the petrol in the tanks in the petrol stations is priced at however much crude cost two months ago, as it's been bought, refined, transported and delivered in that time.
technically speaking, *if* the price of fuel stays sub $90/barrel then around christmas time we might see a reduction at the pumps, but not until...
technically speaking, *if* the price of fuel stays sub $90/barrel then around christmas time we might see a reduction at the pumps, but not until...
Yup. That's pretty much it. davido140 said:
Hell27 said:
Wasnt one of the reasons that it went so high was because traders were allowed to buy stocks at 20% of the price, then sold within their allotted time before having to pay the remainder, and this drove the price up?
Is this what is known as short selling?
Thats futures you're thinking of, essentially trader puts a "deposit" on some oil, promising to pay the current market price for the oil in X amount of time. If the price of oil is higher than when they placed the deposit they pocket the difference, if its lower, they loose the difference.Is this what is known as short selling?
At least thats how I had it explained to me.
The practice should be outlawed, as it wrecks everything in the real world
Hell27 said:
davido140 said:
Hell27 said:
Wasnt one of the reasons that it went so high was because traders were allowed to buy stocks at 20% of the price, then sold within their allotted time before having to pay the remainder, and this drove the price up?
Is this what is known as short selling?
Thats futures you're thinking of, essentially trader puts a "deposit" on some oil, promising to pay the current market price for the oil in X amount of time. If the price of oil is higher than when they placed the deposit they pocket the difference, if its lower, they loose the difference.Is this what is known as short selling?
At least thats how I had it explained to me.
The practice should be outlawed, as it wrecks everything in the real world
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