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Oil spikes $25 a bbl!

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I left the house to work out it was $114 came back not even an hour later and it was $125. wtf over...
 
You know, I used to like the Wall Street Journal. I really think they're full of crap these days, though. Last week, they ran a piece by their in-house editorial staff stating that the "speculator-based" cause of the price of oil was fully-debunked, and that it has now been proven that the real reason is basic supply and demand.

What a load of crap. It didn't help that their editorial completely lacked any explanation or proof of their sole supply and demand theory.

If the price rose $25 so quickly, how can one rationalize that as supply and demand?
 
You know, I used to like the Wall Street Journal. I really think they're full of crap these days, though. Last week, they ran a piece by their in-house editorial staff stating that the "speculator-based" cause of the price of oil was fully-debunked, and that it has now been proven that the real reason is basic supply and demand.

What a load of crap. It didn't help that their editorial completely lacked any explanation or proof of their sole supply and demand theory.

If the price rose $25 so quickly, how can one rationalize that as supply and demand?

I'm no economist, but this is EXACTLY supply and demand.

The supply of oil is finite; it is also seen as a commodity that holds it's value, like gold.

The rise in the cost of oil is a reaction due to lack in the faith of the US dollar triggered by the mess that is currently going on in the banking system. Investors are trying to find a safer harbor for their money . . money is going to oil because it's considered a "safe harbor".

Supply is limited, demand is high . . price goes up. And demand just went up due to dollars looking for safe-harbor investments . . price goes up even more.

(As an aside, gold has gone up $73/ounce since the 18th. )

Ergo . . it's not speculation, it's money looking for a safe harbor.
 
I've also read that the surge in oil today is likely based on certain parties trying to cover a position of October with the end of the month approaching. November delivery is somewhere around $108/bbl still.
 
I thought I saw somewhere that Mexico has their future positions at only $80 per barrel. They are obviously betting that it will go down below $80? Admittedly that is made by a country whose oil business is run by the goverment and primary export is drugs and lawn care workers.
 
The rise in the cost of oil is a reaction due to lack in the faith of the US dollar triggered by the mess that is currently going on in the banking system..

That only explains about $5.00 of the spike. The rest relates to the short squeeze. And if you want all the doom and gloom about the dollar, remember that the housing markets in Europe are collapsing i.e., other currencies will weaken.
 
You know, I used to like the Wall Street Journal. I really think they're full of crap these days, though. Last week, they ran a piece by their in-house editorial staff stating that the "speculator-based" cause of the price of oil was fully-debunked, and that it has now been proven that the real reason is basic supply and demand.

What a load of crap. It didn't help that their editorial completely lacked any explanation or proof of their sole supply and demand theory.

If the price rose $25 so quickly, how can one rationalize that as supply and demand?

I opted not to renew my subscription to the Journal a few months ago after they were sold and became a foreign controlled entity.
 

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