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Mrben
17 Nov 11 10:20
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Date Joined: 25 Oct 03
| Topic/replies: 5,929 | Blogger: Mrben's blog
Can someone please tell me why oil keeps rising?   Economies are about to go into reverse which surely means les demand for oil? Is it a parabolic move? A manipulation?

If anyone  who follows oil knows can you please expalin as my oil knowledge is blot.

Thanks in advanceLove
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Report Menelaus November 17, 2011 12:14 PM GMT
Your knowledge on everything is blot.
Report Menelaus November 17, 2011 12:54 PM GMT
On a more serious note, OIL is NOT going up. Only WTI has gone up which has no relevance in global oil pricing, and only a minor relevance in the US market.

I can post a more elaborate response if there's enough interest from others, but if not, I'm not wasting any more energy educating retarded kangaroos.
Report what do i do now? November 17, 2011 4:37 PM GMT
menelaus - yes please, if u have the time.
Report Menelaus November 17, 2011 6:06 PM GMT
what do i do now? :

Brent is the internationally acknowledged price of OIL. This is what OPEC uses when they make reference to the price of OIL, this is what every credible economist uses in their economic models. Clueless bennyboy doesn't know that because as the rank amateur that he is, when he watches CNBC the only oil price flashing on their screen is the totally irrelevant but totally americacentric WTI......ooops.

There are others, priced within a few dollars of each other, like Bakken, Tapis, Oman, Libyan, Russian Urals to name a few but Brent is the one used in just about every economic model price variant. WTI has always been an aberration because it's the only OIL that CAN NOT be exported. Oil flows north from Cushing to refineries that supply 150bpd to the Northeastern US. WTI does not reach to any ports of export. WTI is totally irrelevant when trying to consider the impact of oil prices to economic growth both because of it's limited volume and inability to reach global markets. WTI has been going up (I'll explain why in a minute) and Brent has been going down to reflect worsening (recessionary) conditions is Europe. WTI's limited impact even on the US market can be clearly seen by the fact that, although it's price has been increasing parabolically of late, the wholesale price of gasoline and other petroleum distillates in the US (which is comprised of about 80pc Brent/20pc WTI) as it trades on NYMEX has in fact being going down, not up (http://tfc-charts.w2d.com/chart/RB/W).

WTI has been going up for a number of reasons:

1. Simply because of it's volume and the regulatory environment in the US, WTI is a trader's oil, not a marketer's oil. Changes in regulation have allowed "investors" the practice of rolling contracts over and over into future contracts. The fact that millions of barrels are being held in storage tied to contracts owned by "investors" that will never take delivery of a single barrel holding supply that could lower the per barrel cost substantially make WTI a trader's oil, nothing more.
2. The WTI price spike started at about the same time it was announced that the flow of an 800km pipeline will be reversed to allow Cushing oil to get to refiners south of Cushing thus expanding it's market reach. The price in this case responded to changing supply/demand fundamentals.
3. Liquidity flows into the inelastic curves. There's a lot of money sloshing around in the markets today looking for a safe (and hopefully some alpha yielding) home. Equities may be due to a deflationary correction (until the next round of QE) and USTs are the ultimate bubble. So this money ends up in domestic oil, WTI.
4. Geopolitical risk priced in. WTI will be unencumbered for delivery to US markets in case of an Iran conflict, replacing other supply which will surely be way more difficult to deliver. The supply "glut" at Cushing will all of a sudden be in high demand and hence more expensive.

I hope this helps.


(You see bennyboy, they don't pay me the big money around here for my amiable personality, they pay me because I know more about the US market than 90pc of economists out there. The other 10pc are the FED chaps that have access to data I can't get my hands on. You on the other hand seem to be getting your "news" from CNBC and are incapable of applying any critical thinking on the bullsh1t they keep feeding you. Good luck with that.)
Report FINE AS FROG HAIR November 17, 2011 6:44 PM GMT
Good summary.
If only Menelaus would take all his undoubted technical knowledge and then look at the overall general market data without preconceived biases.
Then we might be really getting true insights.
As it is, he approaches everything with the same preface.
That is all market movements are being manipulated by americacentric policy makers.
There is apparently no true price discovery anywhere in anything.
That's where I basically disagree with him.
His conclusions of " inevitable " hyperinflation and resultant crashing of the total fiat based world monetary system are currently just conjecture, and probably bad conjecture at that, not proven facts.
Report FINE AS FROG HAIR November 17, 2011 7:50 PM GMT
Can't argue with that philosophy.
Report Menelaus November 18, 2011 6:01 AM GMT
Bennyboy, you forgot to check this out on your way out the door. Laugh

It felt good shoving this answer deep up your ignorant @rse.

Cut and run bennyboy, it must be the australian way. Laugh
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