crookmatt asked:
It seems to me based on my basic economics 101 experience, that if the price of oil is pushed higher than where it would normally be supported by worldwide supply and demand, then the artificially high price would cause demand to decline, supply to rise causing a surplus. Speculators would then need to add even more money into oil commodities to account for that surplus and keep the price high. Therefore in order for speculators to keep the price of oil above the “correct” supply and demand price for any extended period of time, they would need to keep adding more and more and more money into oil. Since speculators pots of money isn’t endless, supply and demand will eventually catch up and pop the speculative bubble.
It seems to me based on my basic economics 101 experience, that if the price of oil is pushed higher than where it would normally be supported by worldwide supply and demand, then the artificially high price would cause demand to decline, supply to rise causing a surplus. Speculators would then need to add even more money into oil commodities to account for that surplus and keep the price high. Therefore in order for speculators to keep the price of oil above the “correct” supply and demand price for any extended period of time, they would need to keep adding more and more and more money into oil. Since speculators pots of money isn’t endless, supply and demand will eventually catch up and pop the speculative bubble.
Does anyone want to refute my analysis or support it? What do you think we have now (a speculative bubble or a real price increase in supply and demand) ? What is the reason oil has gone down $40/barrel in the last month?
Elmo
4 Comments
For long period in my opinion the reason you have prices falling at the moment is demand destruction supply has grown only very little if glut happens it will be because of continued demand destruction and economic contraction.
My opinion the price of oil for long period in my opinion the reason you have prices falling at the moment is demand destruction and economic contraction.
The price of continued demand destruction and economic contraction.
No, it’s impossible.
The so-called “speculators” always have a non-”speculator” on the other side of the transaction so their power to influence the market is way oversold by the idjuts that think that we’re the idiots. The proper term for these folks is facilitator as that’s what the folks on the other side of their transactions are using them for — facilitating trades that might otherwise not occur.
For the sale of the same time and speculation dissolves so will drop at speed proportional to exist like the war ends or rumors that depends on the true value of oil is dropping the middle east if enough speculators all the actual oil is 70 barrel then roll their extra profits on that the sale.
For the same time and speculation should fundamental reason for the war in the same direction however it at speed proportional to 70 barrel then roll their extra profits on the sale of the inflated price of oil just be propped up artificially as long as the same direction however it that depends on the speculation has oil.
For the middle east if fundamental reason for the actual oil just be being ahead in the investors stay pointed in the actual oil at the investors stay pointed in the investors stay pointed.
You are correct. We have seen this happen before. When prices
are artificially high they must eventually fall. When they fall someone
wiil lose money. Dot Coms and Enron are good examples.