July 8, 2008
WHEN PRICE IS THAT DISCONNECTED FROM SUPPLY AND DEMAND...:
Oil prices drop $9 over two days (Clifford Krauss, July 8, 2008, IHT)
Oil prices plunged for the second consecutive day on Tuesday, dropping $5.33 a barrel, to $136.04, and causing a sell-off of oil stocks.Oil analysts said the immediate reasons for the sudden drop in price included the strengthening of the dollar in recent days and the apparent veering northward of Bertha, the first hurricane of the 2008 hurricane season, meaning it was likely to miss the oil and natural gas facilities in the Gulf of Mexico.
They also noted that President Mahmoud Ahmadinejad of Iran had dismissed the possibility that war with the United States and Israel was imminent in remarks to reporters in Kuala Lumpur, relieving worries that Iran might try to block oil shipments in the Strait of Hormuz.
it's bogus. Posted by Orrin Judd at July 8, 2008 6:20 PM
Oil price drops because most people believe the US is heading for a recession, especially when Obama becomes president and raises taxes.
Posted by: ic at July 8, 2008 8:27 PM"They also noted that President Mahmoud Ahmadinejad of Iran had dismissed the possibility that war with the United States and Israel was imminent in remarks to reporters in Kuala Lumpur, relieving worries that Iran might try to block oil shipments in the Strait of Hormuz."
Speculation and hedging have a vital role to play in most any market. Speculation for instance can help insure shortages don't accompany high prices.
Posted by: Perry at July 8, 2008 9:12 PMCommodity prices are affected by belief about their future accessibility. Stabilize Iraq, then move on Syria. A pipeline from Iraq through Syria to the Mediterranean reduces Iran's threats at the Straits of Hormuz.
Who will threaten tankers in the eastern Med in the face of the Sixth fleet?
Posted by: Mikey at July 8, 2008 9:17 PMThe Sixth Fleet's a problem if you're dumb enough to attack it head on with a conventional navy. US ships are vulnerable to low-tech, mass swarming attacks. Iran has no shortage of crazy people willing to go on suicide missions.
Posted by: Ali Choudhury at July 9, 2008 5:13 AMAli: Most Iranians would not swarm en masse at the 6th Fleet. Most Iranians are American allies.
Posted by: Bartman at July 9, 2008 8:40 AMHow is it vulnerable? Al Qaeda couldn't even sink the Cole and now al Qaeda is history.
Posted by: oj at July 9, 2008 8:48 AM
Prices of iron ore, tin, copper and nickel are all up 300 to 400 percent in the last 7 years due to increased demand.
Posted by: djs at July 8, 2008 7:13 PM