Sheep...or On The Take?

[legion]

It seems that oil traders have been extremely bullish on oil since Hurricane Katrina. Any piece of news that can lead to higher oil prices drives the price of a barrel up several dollars on its release (regardless of impact). Any piece of information that could deflate the price of oil seems to be largely ignored. For the last three years, there has been a definite bias to how "the market" reacts to oil-related news.

Violence in Nigeria? The price of crude goes up.

Violence over? The price stays flat.

Gasoline inventories up? That means there is more demand (by refineries)--the price of crude goes up.

Gasoline inventories down? That means there is less supply--the price of crude goes up.

My question is: Are oil traders sheep? Are they just mindlessly following the herd?

OR...

Are they being bribed? Are countries like Iran, Venezuela, or Russia bribing oil traders to act this way?

Just a thought...

[legion]

As usual, I'm out ahead of the news...

http://news.yahoo.com/s/ap/20080304/ap_on_bi_ge/energy_prices

Caruso said that supply and demand cannot account for all of the recent price surge.

"Something is clearly going on," he told the Senate Energy and Natural Resources Committee
...
"I am fairly well convinced that in the short term what we have is an unbelievable orgy of speculation," Dorgan said.

"There's clearly been a surge in moneys coming in to commodities markets, including energy, which has had some upward effect on the price above the trendline," Caruso responded. He said it was difficult to say whether speculation contributed $5 or $10 to the most recent surge, but that his agency's estimate of where prices should be, based on supply and demand, was about $90 a barrel.
...
Energy analysts also have cited the shift of money from the stock market to the commodity markets, including energy, as well as the declining value of the dollar and political turmoil in the Middle East, Nigeria and Venezuela, and a buildup of military forces on the Venezuela-Colombia border in recent days.

[Mule]

Great points.

[einreb]

Originally Posted by legion

As usual, I'm out ahead of the news...

O' Oracle of Bloomington... there have been articles like that being written for years. Oil priced in ever crappier US dollars. FTL.

[rcooled]

Where the hell is all this extra profit going, anyway? I'm pretty sure it doesn't cost that much more to turn a barrel of oil into gasoline than it did 3 years ago. I'd also bet that gasoline consumption for the same period is up too, so it's not a matter of rising prices making up for lack of demand. All the supply & demand mumbo jumbo aside, there's an obscene amount of money collecting in someone's pockets.

[DanielDudley]

Feeding frenzy.

[JeremyD]

Originally Posted by Wayne at Pelican Parts

It's time to short-sell oil. With an economic downturn possibly coming, oil will undoubtedly drop.

-Wayne

I think it's here.

[Dixie]

Never attribute to malice what can be explained by stupidity.

[legion]

Originally Posted by Capt. Carrera

Never attribute to malice what can be explained by stupidity.

Okay, you had me laughing with this.

The point of this thread was to spur discussion of why oil prices are so illogically high.

[strupgolf]

Originally Posted by Wayne at Pelican Parts

It's time to short-sell oil. With an economic downturn possibly coming, oil will undoubtedly drop.

-Wayne

Wayne, you said the same thing last year and predicted oil would drop to $30/barrel. I wish you could get it right, I cant wait much longer.

[trader220]

The market can stay irrational a lot longer then you can stay liquid. I am not even going to address the sheep / herd question thats just silly, I hope you were joking. The weak dollar also plays a part in bidding up crude