There are all kinds of factors in the rise and drop of oil. My .02 is this - over the last several months, two factors contributed to the big jump in prices: (1) US inventories steadily dropping (uncharacteristically) and sending our inventories below average levels; (2) all the saber rattling with Iran. So, its easy to understand with the "surprise" increase in inventories this week and the sudden about face in US relations with Iran (announcing both direct talks and opening a diplomatic presence in Tehran), that oil prices would drop. How far? Who knows, but the speculation caused by those two factors has now been taken out, so that we can see a price based on supply and demand. That's my take.

Here's another reason to throw into the pile :



The phrase "wayang show" comes to mind. It's what we say over here when somebody does a staged show for public consumption.

I think that's an excellent observation. $125 to $130 seems to be the price after the Iran and immediate supply fear are removed.

But there are a few more factors that can quite suddenly impact the price not only as a fear factor, but as a cause of a reduction in production, and #1 among them is growing in the eastern caribbean right now. It could be huge.

There are many other threats, but that's the one that will impact markets Monday morning.

HOT off the PRESS!!!!! Iran says NO ,they will continue thier uranium enrichment program. The OIL sell off last week was fueled by the(dim)hope the EU and the US would negotiate Iran's cancellation of thier uranium enrichment to a certain extent.???will we see a bounce monday?

http://in.reuters.com/article/oilRpt/id ... 4220080719

That and the new storm. Monday will be very exciting... yup!

IMHO, the underlying driver of the current price volatility is the difference between supply and demand on a daily basis.

during the last "oil price shock" (1999?) there was a 5 mbd cushion. supply exceeded demand by 5 million barrels on a daily basis.

that cushion has shrunk to 1 million barrels now. any disruption in supply or even potential disruption in supply will cause the price to spike.

Nigeria, Iran, Tropical Storm Whoever, will all cause oil to spike because there simply isn't enough production on a daily basis to keep the work adequately supplied, in the event of even a minor disruption in supply.

Iran's oil production of 4 mbd can hardly be called a minor disruption. you're right, Monday will be interesting day in the markets.

Oil closed marginally higher, to just under US$129 in the markets over here today.

theres no doubt iran strives to be a nuclear power in the middle east. what i find interesting is how the west wants to stop them via discussion or economic sanctions, when the iranians would want to gain there nuclear power this way. string along the west and aviod confrontation until such time as you are a nuclear power, then who'd dare start confrontation?

i see this problem ending either at the brink of confrontation with iran accepting defeat of its nuclear ambitions, or iran pushing its luck too far ths causing confrontation.

whats your thoughts?

Just a gentle reminder: oil prices have not gone down. The futures contracts for Aug delivery have closed lower. The folks I know who actually sell and buy oil haven't changed the price structure any significant level. Come Aug we'll see if the future players guessed right: if oil is above $135 or so a lot of them are going to loose a big chunk of capital. And if they leveraged on options they'll be slaughtered. But that's the life of a gambler. If oil futures drops below $120 they'll make a nice profit and get credit for helping to lower oil prices (snicker).

The fall has resumed. It's down to $126.26 this morning. Next pause will likely be at the 50% retracement line: $122.60.

Meanwhile natural gas continues to close in on it's 200 day moving average. From $13.69 on 7/2, August natural gas contracts are down to $9.88 today. The 200 day moving average is at $9.72.

SPG - so far your call has been dead on. Well done.

Ouch again. Tomorrow will be a very interesting day.
$100, $100, $100
$80, $80 twice, Sold for $80

Cashmere I like you new avatar..... The old one made was just disgusting

You were warned.

Losers don't know when to cut their losses.

Actually, I don't T - I'm still waiting on the PM with your contact info so we can set up the private commodities contract.