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CursedLemon
Joined: 07 Sep 2006
Posts: 280
Location: The Corpse of the Motor City
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beachbum bob
Joined: 14 Sep 2005
Posts: 23719
Location: Home state of the ChiSox and Obama
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| Posted: Sat Oct 28, 2006 10:17 am Post subject: Re: How much do speculators influence the price of oil? |
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CursedLemon wrote: Can someone explain that to me?
oil
unleaded gas
are all commodities and BIG OIL have commodity traders...as well as the big investment houses
option contracts
future contracts
spot prices
no small wonder the price of gas went down...after Goldman-Sachs unloaded 2/3's of the gas futures, which drove the price down
Where did paulson come from? He is the current Sec. of Treasury...and former head of Goldman-Sachs
the explanation of how commodity market works can be googled |
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gavnook
Joined: 18 Jan 2006
Posts: 1859
Location: Arizona
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| Posted: Sat Oct 28, 2006 4:04 pm Post subject: |
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| Speculators raise prices in anticipation of higher future market clearing prices and lower prices in anticipation of lower future prices. |
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PS_Student
Joined: 28 Oct 2006
Posts: 50
Location: Osan
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| Posted: Sun Oct 29, 2006 2:49 am Post subject: |
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| Speculatos anticipate [oil] prices by using trends, current affairs and how they would affect the price for [oil]. Speculators then tell agencies to make contracts with oil firms for the lowest prices possible. An example of this would be a speculator anticipating an oil increase from like 5$ a barrel and foresees next years price will be 9$ a barrel (due to like... no oil from Venezuela) They then help agencies and firms make a contract (let's say, they contract at 6$)so the supplier is obligated to sell at 6$ a barrel even if the market clearing is 50$ a barrel. |
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Brock
Joined: 04 Oct 2006
Posts: 297
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| Posted: Sun Oct 29, 2006 7:41 pm Post subject: |
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PS_Student wrote: Speculatos anticipate [oil] prices by using trends, current affairs and how they would affect the price for [oil]. Speculators then tell agencies to make contracts with oil firms for the lowest prices possible. An example of this would be a speculator anticipating an oil increase from like 5$ a barrel and foresees next years price will be 9$ a barrel (due to like... no oil from Venezuela) They then help agencies and firms make a contract (let's say, they contract at 6$)so the supplier is obligated to sell at 6$ a barrel even if the market clearing is 50$ a barrel.
are you saying that the supplier, only sells for $6 and the traders mark it up to $50 and resell it? |
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PS_Student
Joined: 28 Oct 2006
Posts: 50
Location: Osan
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| Posted: Sun Oct 29, 2006 8:16 pm Post subject: |
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Brock wrote:
are you saying that the supplier, only sells for $6 and the traders mark it up to $50 and resell it?
I believe the trader ensures a contract at purchasing barrels at 6$ even if there was like supply shortage and caused the barrels to skyrocket to 50$. What they do with the barrels goes into their own personal interests so I dunno. |
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chris_mthomas
Joined: 29 Jan 2006
Posts: 561
Location: Shenzhen
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| Posted: Mon Oct 30, 2006 10:40 am Post subject: |
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Quote: How much do speculators influence the price of oil?
Increased speculation in a market makes the prices more volatile. |
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PS_Student
Joined: 28 Oct 2006
Posts: 50
Location: Osan
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| Posted: Wed Nov 01, 2006 7:00 pm Post subject: |
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woops-
Just realized I was explaining Speculation + Hedging, speculation I think is to just use trends to guess the prices in the future. The buying of oil at cheaper prices is the act of using speculation to hedge, and undergo arbitrage to get profit of some sort |
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