Oil Prices Skyrocket Due to Speculators
What is thought to be a major driving force behind the spike is the possible OPEC vote next month to cut crude oil production. OPEC is projecting a cut in production of 1.8 million barrels a day. This is due to a forecast of a lessening demand in the United States because of the approach the end of the heating oil season. Also driving this market is the falling value of the dollar. Foreign investors find crude oil futures attractive when the dollar falls. Today's inflation numbers to be released by the Labor Department, if as predicted can further drive oil prices up.
Gas prices at the pump rose 2.1 cents today for a national average of $ 3.053 a gallon further fueling speculation of more economic woes ahead due to an increase in consumer prices. The rise in gas prices is expected to hit the economy hard in all sectors especially agriculture and transportation.
Any lists see reports such as the rough weather that has recently shut Mexican ports, violence in Nigeria, the threats of Venezuelan President Hugo Chavez and the refinery fire in Texas as non-factors. Phi Flynn, an analyst at Alaron Trading Corp of Chicago was quoted by NPR as saying "I would imagine that speculators are the biggest drivers today." With the release today of the Consumer Price Index, the price for a barrel of crude may jump even higher.
Sources:
Various Reports: Oil Prices Jump To 100 Dollars A Barrel National Public Radio; http://www.npr.org/templates/story/story.php?storyId=17784031
Dean Calbreath: Higher Cost Feared For Gas, Other Costs; San Diego Union-Tribune; http://www.signonsandiego.com/news/business/20080220-9999-1n20oil.html
Associated Press: Oil Prices Fluctuate After Reaching 100 Dollars A Barrel; New York Times; http://www.nytimes.com/2008/02/20/business/worldbusiness/apee-oil.html?ref=business
Published by Ray Mickol
Ray Mickol has worked as a Firefighter and Paramedic for over twenty years. Mr. Mickol is certified as an American Heart Association Instructor. He is also credentialed as a State of Ohio CE Instructor. As w... View profile
- High Oil Prices and Peak Oil Today world oil prices reached new records. Again. Coming as high as $109.72 per barrel in trading, it finally settled at $108.75.
Tropical Storm Gustav Sends Oil Prices SoaringThe National Hurricane Center has issued a tropical storm Gustav public advisory that warns residents of Hispaniola to prepare for the impact of former tropical depression seven...- OPEC Oil Production Rose in November, Says Information Group"For consumers, it's encouraging to see Saudi Arabia above the 9 million barrel per day mark."
- Oil Price Hits Above $140 on the Back of Libya, OPEC, Supply Disruptions and Lower...The price of oil hit above $140 dollars per barrel today amidst a slew of troubles. The record surge comes after supply constraints and falling production.
- Individual Speculators and the Popularity of Forex TradingGeneral article about the Forex Market and its popularity with speculators.
- Crude Oil Production Costs to Fuel Increasingly High Oil Prices
- World Demand for Crude Oil and Exploration Techniques
- Biomass Cuts Crude Oil Consumption by 28% and Imports by 58 %
- Crude Oil Prices: Facts Behind Rates and their Effects on Prices at the Pump
- The Affect of $107 Per Barrel Oil Prices on Real Estate Investment
- Record Crude Oil Prices Leading to Renewable Energy Research
- Is Crude Oil Really Worth $80?
5 Comments
Post a CommentDid you ever think about getting a job?
Why not increase the margin requirements and see what it does to the price. Robert, you cite no data to help support your statement about speculators not controlling price. No, it doesn't control it. They simply pile on more cost. Probably about $40 per barrel right now.
Not true at all! Are you aware that for a little over $3000 you can control over $67,000 dollars worth of Gasoline futures. Speculators ARE the cause of the high gas prices pure and simple. Get your head out of the sand.
Today's prices almost makes that $3.05 look cheap. It's a conspiracy :-)
Respectfully disagree. Speculators cannot control the price of oil to such a degree. The volumes and money involved are far too great. Over 8 billion dollars worth of oil are sold each day. That's 2.4 Trillion each year. Speculators on a whole do not leverage that kind of cash.
The reason for the high price of oil is systemic. There is simply not enough supply.