Why are oil prices plunges and what is next?

[JimH52]

What's Behind (and Ahead for) the Plunging Price of Oil - TIME

But how long will the price of oil fall? There will be a rebound and we will be back at $100 a barrel one day but no one sees that day right now.

 

[Remey688]

Prices go down and prices go up!

 

[Charles_Main]

Falling demand and artificially high prices to begin with.

Simple economics.

 

[bigdaddygtr]

Falling demand and artificially high prices to begin with.

Simple economics.

I think thats a big part, but I also believe that OPEC is releasing more oil in response to a probable Obama win and getting out of Iraq which they hate that we're there

 

[JimH52]

Yeah, we just ousted Saddam for them. Now we can leave.

 

[Toro]

OPEC has little to do with it.

They need the money and are pumping away.

It was funny when Chavez said he'd cut 150k barrels. As if. When oil was at $145, they couldn't balance the budget. Now, he's in deep doodoo.

 

[JimH52]

Don't count on low oil prices for long. OPEC nations have budgeted for $80-90 a barrel of oil and as it plunges below that number, they will cut production until they are able to revive the price per barrel. $140 a barrel will return one day but hopefully we will be more prepared than before.

 

[bigbroodmaster]

OPEC is talking about artificially keeping the price of oil high by stockpiling it.

 

[dilloduck]

The price of gas plummeted at the same time that the stock market did. Thank a speculator for screwing you. So much for the supply and demand theory of high gas prices. Now everyone who blamed big oil for this, raise you hands.

 

[bigbroodmaster]

The reason the price of gas and oil went down is because there isn't going to be as much demand for it. That's the point: there was a large demand for gas even a few months ago, and because of the economic crisis, that demand is starting to shore up. People are flying less, driving less, going on road trips less. That means less gas is being used, which means there is more of it available, and it isn't as desirable as it once was. That drives the price down.

Supply and demand in action.

 

[dilloduck]

The reason the price of gas and oil went down is because there isn't going to be as much demand for it. That's the point: there was a large demand for gas even a few months ago, and because of the economic crisis, that demand is starting to shore up. People are flying less, driving less, going on road trips less. That means less gas is being used, which means there is more of it available, and it isn't as desirable as it once was. That drives the price down.

Supply and demand in action.

Link me up . I want to see how badly WORLD demand plummeted.

 

[bigbroodmaster]

I can't post links yet. I need 15 posts. But I will in a few moments, because I've found it.

 

[bigbroodmaster]

Besides, WORLD demand (as in the amount of oil the world consumes) is highly dependant on how much oil the US uses, because it makes up a large percentage of oil-users. If demand slips in the US, it will show up very strongly on world demand.

 

[Andrew2382]

gas started going down before the market collpased.

IT all has to do with supply and demand.

This is why we still need to drill, to keep the supply up.

It's economic 101

 

[bigbroodmaster]

Oil at 17-month low on demand worries | The Australian

 

[dilloduck]

"Whatever you want to call it - speculators, fast money, hot money - a big part of the drop in crude that we've seen this year is because of selling by hedge funds," says Merrill Lynch technical analyst Mary Ann Bartels.

Hedge fund speculation and sales explain drop gas prices - October 30, 2006

 

[bigbroodmaster]

People tend to sell things that they see underperforming in the future. You're saying that the price of oil is dropping because of people selling their positions? Yes, that's how the market operates, and it says nothing about demand at all positive or negative.

If you read closer in the article, it mentions that stocks were driven up by the threat of a hurricane. Now why would that be?

 

[dilloduck]

People tend to sell things that they see underperforming in the future. You're saying that the price of oil is dropping because of people selling their positions? Yes, that's how the market operates, and it says nothing about demand at all positive or negative.

If you read closer in the article, it mentions that stocks were driven up by the threat of a hurricane. Now why would that be?

People gambling on what they think MIGHT happen.

 

[sealybobo]

1 week before the election? Let me guess.

It already made you forgive and forget the $700 billion they just took from you.

You didn't care bush spent $10 billion in a month for 6 years because he just threw it on the debt.

American voters are really really stupid.

 

[bigbroodmaster]

People gambling on what they think MIGHT happen.

What might happen? Supply shrinking, meaning the increase in the value of oil.

What you're arguing is that it's speculative, like virtually any other company traded on the stock market. It says absolutely nothing about the principles of supply and demand.

People buy and sell positions due to what they believe is going to happen. If they think supply is going to be disrupted, it's a good bet that the price of gas will rise. In the same way that people predict less demand for oil, and the price of gas goes down. It's 100% related to supply and demand.