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I certainly can't say with any certainty how much impact rank speculation has on the price of oil.  It does, however, strain credulity that any time oil goes up at all, the talking heads can talk about nothing but speculation, 'fear premium', geopolitical risks...anything except maybe oil is justified in becoming dearer.  This apparently never happens, at least not until the new price level is established for four or five months.  This sort of thing does not happen with any other commodity.  It's as if oil is the only commodity that exists in anything less then a perfect market or is somehow the only game in town for big swinging dicks to make a buck off of
by bselig on Wed Nov 7th, 2007 at 04:40:15 AM EST
Wasn't there a chart of world oil supply and demand posted recently?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Nov 7th, 2007 at 04:52:21 AM EST
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Ah, got it!

Now a methodological question. How are the supply and demand calculated and how can they not be equal? Where does the mismatch come from?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Nov 7th, 2007 at 04:54:20 AM EST
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Storage and oil in transit innit?

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Wed Nov 7th, 2007 at 04:59:01 AM EST
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So "supply" means "production" as demand is larger than supply.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Nov 7th, 2007 at 05:00:44 AM EST
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I would be amazed if hedge funds weren't massively punting the market right now.

I believe that there is a significant risk of an energy market "discontinuity" that could cause major problems for energy clearing houses if all of these punters rush for an exit that isn't there.

Clearing Houses are under-capitalised for the actual risks that they take on IMHO, and constitute "single points of failure".

I guess they take the view that governments would step in and bail them out.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Nov 7th, 2007 at 04:57:51 AM EST
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