A bunch of greedy barrow-boys on the make seem to be very good at buying and selling a commodity in such away that whatever happens, they rake in tons of money for themselves and their pimps.

However, their cultural inability to shift out of "what is good for me  now, today ?" means that they have proved to be effectively ignorant of geo-political trends that don't help them at this time.

Their job is to be reactive, not pro-active. So, sadly, they are not well-placed to predict what happens tomorrow. In a well-ordered system, that'd be somebody else's job.

keep to the Fen Causeway

I assume that real buyers of commodity futures use them as a way to control raw material costs in an orderly way. I used to watch silver when Kodak was using a lot, prices were usually rational except for the time the Hunt brothers tried to corner the silver market.

Speculators, on the other hand, aren't interested in future commodity costs, they treat the contracts like bets on horse races. So they spend more time studying the psychology of markets than economic forces.

Only the poor can afford to gamble. The rich invest.


Policies not Politics
---- Daily Landscape

The quoted graph shows a similar-looking pattern that moved up a dozen dollars (and whose leg got less steep), e.g. futures prices following spot prices with some damping, and I saw the same happen on a daily basis.

_{*Lunatic*, n.
One whose delusions are out of fashion.}

For twenty years, that long term expectation was extraordinarily stable. It is just as remarkable how quickly that long term expectation has changed in the past 3 years. This is truly the market absorbing new information.

That curve alone tells us that the markets know that something major has changed in the oil market, and that it will not go back to the "good ol' days". The markets are saying thay prices will not go down - not for long anyway.

And people are betting serious money on that, never forget it.

Countdown to $100 oil (24) - What markets are telling us about future energy prices

In the long run, we're all dead. John Maynard Keynes

• major weather events such as Katrina;
  
• civil unrest in an oil-producing region (e.g., Nigeria) that takes a significant volume of production capacity offline;
  
• embargoes against countries or voluntary withdrawal of capacity for political purposes (think Venezuela, Iran, etc.)
  

It's been patently obvious since 2001 the US money supply has been 'managed' by the Major Money Center Banks driving a semi-tractor/trailer truck up to the FED and filling it with peachy-greenbacks.  For god's sakes, for 2 years the FED was paying MCBs - through a net negative interest rate - to haul the stuff away.

So there is lots & lots of US bucks, as a commodity, bidding against a declining net supply versus demand.  So the price, in those dollars, went up.  (Duh)

Nobody in their right mind, in 2000, would have thought the President of the US would invade Iraq.  But he did.  So there be lots & lots of US bucks, as a commodity, bidding against a declining net supply versus demand plus IdiotStick further reduces the total oil supply by playing at Alexander the Great.  

So the price, in dollars, goes up even more.  

And the money the FED is throwing into the economy is sending house prices ever upward and those houses are being constructed ever further in the boonies resulting in people driving 300 kilometers a day to get to their wage-slave stupid job so they can pay the mortgage, consumer debt, and car payment so the people who work in the construction industry, at the bank, the WorthlessCrap-R-Us Shopping "Experience," or car dealerships who are also driving 300 kilometers a day to their wage-slave stupid job ... can keep their job.  And all of this results in greater demand for oil and the price goes up.  

Again.

And economists come upon the TV and speak punditly about people making rational economic decisions?

Just kill me now.

</rant>

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre