Oil Prices Going..............down?
By Number Six
Saturday, September 16, 2006 at 09:21 PM
Leapin' lizards, Daddy Warbucks, say it ain't so!...Apparently so. Whatever could have happened? Weren't we supposed to be in this curve or peak thingie? A shortage? What the....?
Could this be the work of those pesky fascist Rethugs telling their oil friends to back the hell off so they can stay in power? Maybe, but there are other reasons.
Oil traders bet that such worrisome developments would drive up the future price of oil. Oil is traded in contracts for future delivery, and companies that take physical delivery of oil are just a small part of total trading. Financial players, such as large pension and commodities funds, are the big traders and they're seeking profits. They've sunk $105 billion or more into oil futures in recent years, according to Verleger. Their bets that oil prices would rise in the future bid up the price of oil.
That, in turn, led users of oil to create stockpiles as cushions against supply disruptions and even higher future prices. Now inventories of oil are approaching 1990 levels.
Yep, the hedge fund crew was at it, speculating the prices UP. A little market fear, presto, 39.95 a gallon. Suddenly, stockpiles exist to cushion against further shortages, and where a stockpile exists, and demands falls (Summer's over, take the hint already), prices, of course, fall accordingly.
It still says one thing: Somebody made a royal mutha of a profit this year. Wonder who?