Crude Oil Drops $16/Barrel In 3 Days ...

[Mike Strong]

... after GW makes the symbolic gesture of repealing The Executive Ban on Off Shore Drilling, ...

... just think how much further it would go down if The Dem. Controled Congres followed suit !

Another 30 dollars a barrel most likely.

And what would that mean in terms of what you pay for gasoline at the pump?

$2.00 -$2.25 by November, ...

... ahhhh, but we wouldn't want that now would we

We need to do EVERYTHING, and we need to do EVERYTHING NOW !!!

And yes, - that means nuke power for the electricty to plug your stupid hippy golf carts into, + T Boone Pickens Plan + NG, Wind, Solar, adn Cellulosic Biofuel ...


... FUCK !!!

And Congress wants to sit back and let us sink, because they think it will get Obama in The White House.

I've said it before,andI'll say it agine: The Republicans are bad, but The Democrats are worse !

[qiphlow]

or perhaps gas costs 4.45 per gallon in SF because people will pay that much and the oil companies know it.

[Mike Strong]

No, that's not how it works ...

... speculation on the futures market sets the price of crude, and that, in turn, is the precurser of refined gasoline, gasoline on The Williams Bros. Pipeline, and then finnally the price at the pump ...

... Bush's lift on The Executive Ban on Offshore Drilling was merely symbolic, an yet speculators placed their bets on a greater supply of crude, and so the price of crude is going down ...

... if Congress were to lift the ban, and Oil Companies were ACTUALLY allowed to drill where they KNOW the oil is, - prices will plumet.

WE NEED OIL FOR THE NEXT 30 or 40 YEARS.

WE NEED TO GET OFF OF OIL IN THE NEXT 30 or 40 YEARS.

[Teazer]

Considering the international market for oil doesn't give a rats about theoretical drilling that might produce some oil in a few years time, I think more convincing arguments for the price drop could be that: US oil supply numbers were higher than expected, combined with slowing economies around the world lowering demand + the existing Saudi pledge of higher output over the Summer. That plus no major new political issues in relevant countries + the dollar going up a bit vs other countries.

[Royal Dragon]

No, that's not how it works ...

... speculation on the futures market sets the price of crude, and that, in turn, is the precurser of refined gasoline, gasoline on The Williams Bros. Pipeline, and then finnally the price at the pump ...

... Bush's lift on The Executive Ban on Offshore Drilling was merely symbolic, an yet speculators placed their bets on a greater supply of crude, and so the price of crude is going down ...

... if Congress were to lift the ban, and Oil Companies were ACTUALLY allowed to drill where they KNOW the oil is, - prices will plumet.

WE NEED OIL FOR THE NEXT 30 or 40 YEARS.

WE NEED TO GET OFF OF OIL IN THE NEXT 30 or 40 YEARS.

Reply]
Actually, no it doesn't. The fundementals of supply and demand set the price, not the speculators.

Heres why:
A Futures contract is a contract set to conclude in the future. Most Speculators only trade in the first 3 month contracts, and a great majority only hold thier contract for a few days to a week. There are a LARGE number of day traders who only hold thier contract for a few hours. This is the norm really. Futures are way to volatile to try and hold for any length of time.

So no matter how many buy, any rise in price is offset when they sell it shortly thereafter. Because of this Futures speculators cannot greatly effect the price like a Stock speculator can. they just can't hold a contract long enough due to the fact that they HAVE to get rid of it before it expires OR they face taking delivery of the underlying commodity...say 5000 bushels of Number 2 Yellow Corn for example. Can you imagine your entire home filled floor to ceiling with corn?

The drop in price is from Saudi sources stepping up and putting more supply on the market...which is a temporary thing and the price drop will only last until they stop adding supply to the market place, OR we cut demand via new technologies. There may be a temporary drop on the news from Bush, BUT that is just a small speculators glitch that cannot last due to the speculators inability to drive over all price direction.

Speculators do not determine the over all price, only the small day to day fluctuations. The speculators main function is to delay sudden price spikes for a short term to allow the over all economy to adjust so as to not be suddenly shocked with price spikes that would otherwise be disastrous. That is thier function, and that is all they are capable of doing...delaying the inevitable.

[qiphlow]

i know from a bout of jury duty that i had to deal with that chevron, for one, prices their product at whatever the market will bear. i would assume that the others would follow the same strategy.

[Steve James]

Yeah, it is a supply and demand issue. When people use less, they end up paying less. Of course, if we produced more, then we'd have lower prices as well. However, we (in the Us) import most of our oil --1/4 from Canada, btw. It's a fallacy to think of oil companies as belonging to the US, though. If they produce more oil, they will sell it on the world market, not the American market. That's especially true when other countries are willing to pay more. Like Japan, for ex.

Btw, it was GB 1 who instituted the restrictions, in the first place. But, if we're talking about the near future, then why not open up the strategic oil reserves? That is "our" oil --though I don't think that "we" have any oil refineries, either.

Anyway, I'm glad that the price of barrels is going down. Now, when the price of gallons is affected, I'll be happy.

[Royal Dragon]

My thought is this is a temporary glitch, maybe even just a small profit taking sell off. It will remain to be seen if this is infact the end of the trend or not. It could drop another $25.00 or more, then resume it's climb like it never happened still. We have yet to take out critical support levels.

It closed below the 9 bar on the weekly chart, but we won't know if that will hold for a week or so. It has to take out the 18 bar, and post a second week with a close below that (baring a reversal bar) before we can say the trend is bearish and not just correcting.

Often in a situation like this the sudden drop is nothing more than the first bar in a triangle formation...which means weeks of sideways up and down motion slowly tightening in range before it breaks out and violently resumes it's rally.

You really cannot trade the market in this enviroment, unless you are paying hefty subscription fees for live second by second chart feeds and can stare at a monitor without a brake the whole trading session.

Here is a weekly chart

http://futuresource.quote.com/charts/ch ... 2C18%29%3B