posted September 15, 2008 12:12 PM            

God, that's so funny.

Bush says Drill, Drill, Drill and kicks off panic in oil producers, commodity brokers and oil speculators.

Talking heads and acoustic say a 2-3% reduction in US gasoline useage...which is about 25% of world usage caused a 35% reduction in World Oil Prices.

posted September 15, 2008 01:14 PM            

a 2-3% reduction in even world gasoline usage doesn't come close to reducing world crude oil prices 35%.

posted September 15, 2008 03:21 PM            

You know nothing about equity and commodity markets, nothing at all, yet you consider yourself qualified to deliver an opinion that those people who have a vested interest in the oil futures markets are telling the truth. Nothing could be further from the truth.

Those brokers and commodity market speculators are permitted to operate to provide liquidity for the markets. In other words, in the case of brokers...a source to whom contracts can be sold quickly through the exchange and who receive a fee/spread...difference between the bid/ask price for being willing to trade X number of contracts at a stated price.

posted September 15, 2008 05:15 PM            

My take on what's going on is correct and the nonsense the broker/traders are saying is utter nonsense and intended to keep people in the dark.

The cause which dropped world oil prices 35% was not a 2-3% reduction in gasoline usage.

Bush said Drill, Drill, Drill....and world oil prices promptly fell out of the sky...where they never belonged in the first place because oil is not a commodity in short supply.

posted September 15, 2008 09:10 PM            

Oil prices took a very small up due to uncerainty over Hurricane Gustav which was forecast to disrupt oil operations..pumping in the Gulf of Mexico, causing the shutdown of operations of the Gulf oil platforms. That went away very quickly and operations resumed. It's been freefalling oil prices since...and the temporary rise was only a couple of bucks per barrel to begin with.

Even with Ike tearing up oil platforms and shutting down refineries along the impacted area...oil prices still dropped out of the sky.

Bush said Drill, Drill, Drill and producers and commodity oil futures brokers wet themselves. The party is over and they know it.

posted September 16, 2008 12:21 AM            

In the interest of context (from Forbes):

Oil Slips Back Below $100
Melinda Peer, 09.15.08, 8:39 PM ET

It was hardly business as usual on Wall Street on Monday and oil trading proved no exception. Crude settled below $100 a barrel for the first time in six months despite concerns that Hurricane Ike and Nigerian rebel attacks could significantly disrupt oil production.

Hurricane Ike sidestepped important U.S. oil and gas infrastructure along the Gulf Coast, proving less destructive than feared, but companies were still assessing damage and attacks by Nigerian militants on Royal Dutch Shell oil facilities only got worse in a third day of fighting. The Movement for the Emancipation of the Niger Delta is fighting to win a share of the oil wealth in the Niger Delta for the locals there. Government officials said production of 115,000 barrels a day may have been stopped since Saturday as militants demanded workers evacuate the oilfields. Violence in the region for the past two years has already cost Nigeria a fifth of its oil output.

Oil prices hit a record high of $147.27 a barrel in July as populous, energy-hungry emerging markets have raised demand on the world's oil supplies. Investors have also been driving up future prices by using oil as a hedge against the weak U.S. dollar.

However, with the global economy slowing, light crude for November delivery has been selling off for the past month. It settled New York's trading session Monday at $94.49 a barrel, closing barely ahead of the session's low of $94.13. The settle price is down $6.76 from Friday's settle price of $101.25.

The sharp drop Monday reflected fears that energy demand stands to decline even more if U.S. economic weakness cracks global markets (See "Fear Of Global Weakness Puts Asia In Reverse"). Wall Street's week got off to a tumultuous start on news that Bank of America agreed to buy Merrill Lynch for $50.0 billion and Lehman Brothers Holdings declared bankruptcy (see "Lehman Goes To The Wall"). Analysts said investors were likely anticipating a big commodities sell-off as Lehman, and possibly Merrill, close positions on raw materials.

The United States Oil Fund exchange-traded fund lost $5.19, or 6.4%, to close the session at $76.30 and the Energy Select Sector SPDR ETF shed $5.28, or 7.7%, to close at $63.65.

posted October 24, 2008 04:46 PM            

COLUMBUS, Ohio – Crude prices tumbled Friday and a gallon of gasoline fell below year-ago levels for the first time in 2008, even as OPEC announced a huge production cut in an attempt to halt the declines.

Crude prices have now fallen 56 percent from the highs reached in July, and more than $41 per barrel in just the last month.

Gathered in Vienna, Austria, on Friday to stanch plunging oil prices, OPEC announced it would slash oil production by 1.5 million barrels a day.

Oil prices plunged more than 5 percent.

Investors paid little heed to OPEC attempts to limit supply, instead focusing on global demand as financial markets spiraled downward in Asia, Europe and then the United States.

Light, sweet crude for December delivery fell $3.69 to settle at $64.15 a barrel on the New York Mercantile Exchange. Prices had fallen as low as $62.85 earlier in the day.

The continuing decline in oil prices, even in the face of OPEC production cuts, only cemented bearish sentiment on the oil market.

"All OPEC confirmed for the market is how weak demand is," oil trader and analyst Stephen Schork said.

Supporting that view was a report released Friday by the U.S. Department of Transportation that showed the largest monthly decline in miles driven in 66 years.

In the month after gas prices peaked at $4.11 per gallon, Americans drove 5.6 percent less, or 15 billion fewer miles, in August 2008 compared with August 2007 — the biggest single monthly decline since the data was first collected regularly in 1942.

Americans have drastically altered driving habits, if they are driving at all, amid a severe economic downturn. They have cut discretionary trips, and are carpooling and using public transportation more.

A Labor Department report released this month showed that the number of people who have become unemployed over the last year has risen by 2.2 million to 9.5 million.

From November through August, Americans drove 78.1 billion fewer miles than they did over the same 10-month period a year earlier. The decline is most evident in rural interstate travel where travel is down more than 4 percent compared with a 2 percent decline in urban miles traveled, according to the agency.

The Transportation Department said the biggest decline in driving was in Florida where miles traveled fell by 9.7 percent. Driving in the south Atlantic region, including Florida, fell 7.4 percent, the most of any region in the country.

And the latest weekly report from the U.S. Department of Energy shows that demand for crude has fallen in 38 of the past 42 weeks. U.S. demand is down nearly 10 percent during the past four weeks compared with last year.

That has translated into rapidly declining prices at the pump.

On Friday, for the first time this year, the average retail price of gasoline fell below what it was on the same day in 2007.

A gallon of regular gas fell 4 cents overnight to a new national average of $2.78, according to auto club AAA, the Oil Price Information Service and Wright Express. That's nearly a dollar less than what was paid last month and 4 cents below gas prices one year ago on Oct. 24.

Gas prices are off from their July peak by about a third compared with the price of crude, which has been more than halved.

There is a lag between the two prices as oil being traded now will not be delivered until next month. That oil must be refined, or turned into gasoline, and then shipped to filling stations.

As for the oil being priced on markets today, oil traders are increasingly gauging future demand on dour financial markets.

Gasoline prices are all but certain to follow that downward trend.

Fred Rozell, retail pricing director at Oil Price Information Service, said prices have room to drop another 20 to 30 cents.

Schork said he could see oil prices falling to $50 a barrel, even though he believes prices will eventually stabilize between $70 and $90.

"We're still in a hangover from the $150 party," he said.

The decline also has come on the back of a strengthening dollar. Investors often buy commodities like crude oil to hedge against a weakening dollar, and sell those investments when the dollar rebounds.

It also means that nations with rapidly growing economies such as China and India will pay more for fuel, which could force them to cut back.

On Friday, there was ample evidence of global economic volatility.

Wall Street joined world stock markets in a pullback Friday, with the Dow Jones industrials dropping 175 points and all the major indexes falling more than 2 percent.

Japan's Nikkei stock average fell a staggering 9.60 percent. In Europe, Germany's benchmark DAX index was down 7.1 percent, France's CAC40 dropped 5.7 percent while Britain's FTSE 100 sank 6.8 percent after the government said its gross domestic product fell 0.5 percent in the third quarter, putting the country on the brink of recession.

In other Nymex trading, heating oil futures fell 8.32 cents to $1.95 a gallon, while gasoline futures fell 10 cents to $1.47 a gallon. Natural gas for November delivery fell 18 cents to $6.23 per 1,000 cubic feet.

In London, November Brent crude fell $3.87 to $62.05 a barrel on the ICE Futures exchange.

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