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2007-08-02 Home Front Economy
Crude Speculators Traders Pump Oil Toward $100 Level
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Posted by  2007-08-02 10:51|| E-Mail|| Front Page|| [499 views ]  Top

#1 I've read dozens of articles about $100 oil in the last weeks, they sound almost giddy about it when they talk.
At $100 a bbl. you will make a lot of money on oil futures, to the exclusion of almost every other sector of the American economy. Will you have money to go out to dinner or go on vacation, or shop for new shoes if you have to pay $5 a gallon for gas? I know I won't.
Posted by bigjim-ky 2007-08-02 11:22||   2007-08-02 11:22|| Front Page Top

#2 Time to short oil?
Posted by doc 2007-08-02 11:27||   2007-08-02 11:27|| Front Page Top

#3 When does summer blending end, 8/31 or 9/30???

Posted by anonymous2u 2007-08-02 13:02||   2007-08-02 13:02|| Front Page Top

#4 a2u,
Based on the fact that pump prices have trended flat-to-down for the past few weeks while crude prices have gone up 12%, I'd guess the refining part of the higher cost summer blend is pretty much done already.
Posted by Glenmore">Glenmore  2007-08-02 18:46||   2007-08-02 18:46|| Front Page Top

#5 The "price of a barrel of oil" is deceptive, because it actually only means the price of a barrel of Light Sweet Crude on the spot market, which is a very small percentage of the total.

To start with, the vast majority of oil is Heavy Sour Crude, which means it both has lower grade fuels in it, and more sulphur. It is inexpensive, because few refineries wish to refine it. But it's still good for low-end oil needs.

The vast bulk of LSC is sold in bulk contracts with the major consumers a year or so in advance of delivery. Because the price is guaranteed, it is lower and doesn't fluctuate.

This leaves the spot market. It is for smaller consumers of oil that cannot buy in bulk, so they have to buy "retail". This is where the speculation and volatility happen, and it mostly hits the 3rd and 4th world, and *new* consumers.

By this I mean that once a consumer buys the oil they need in a long term contract, if they underestimated how much they needed, they would have to buy it on the spot market.

So it is not the price of crude that drives gasoline prices in the US. Ironically, it is the refineries. This is because refineries have to tool their operations to making just certain kinds of fuel, and well in advance.

So they have to guess what the demands and prices for fuel is going to be, because it is expensive and difficult to re-tool. Will there be extra demand on gasoline, home heating oil, or jet fuel; or will there be excess?

If they predict a cold winter, then they will make more home heating oil, and there will be less gasoline and jet fuel, so their prices will go up.
Posted by Anonymoose 2007-08-02 19:23||   2007-08-02 19:23|| Front Page Top

#6 Good laydown.
Posted by Army Life 2007-08-02 22:17||   2007-08-02 22:17|| Front Page Top

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