cowman
Final Approach
I'm not a financial expert or anything but I've noticed when a price goes way up in a short period of time it tends to come back down. I think in the long term that's what will happen as supply catches up
Brent crude over $105/bbl
- Thread starter Morgan3820
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I'm not a financial expert or anything but I've noticed when a price goes way up in a short period of time it tends to come back down. I think in the long term that's what will happen as supply catches up
Morgan3820
En-Route
So… your saying that when prices go up, that they then may come down. Got it
FYI: keep in mind the price that is usually shown is the oil futures price and not the oil spot price. And right now they are into April contracts. So there can be swings in price over short periods. Same on the gasoline markets which use futures, spot, and option prices.
FormerHangie
En-Route
The fundamentals of the oil market haven't changed. The futures price have been bid up in the anticipation of a supply disruption, but no such disruption has happened yet, and there's no event on the immediate horizon to think they will be.
cowtowner
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Cowtowner
Uh, taking Russian oil offline world wide is a pretty big disruption.
However, there is extreme backwardization in the oil market which means the market believes the price will return to the mean. (April 22 Futures at $108 and April 23 Futures at $82)
Except its not "offline" just redirected to different customers. Its rare when the oil stops actually flowing.
cowtowner
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Cowtowner
There are tankers full of Russian oil that are offering their goods at $20-30 under spot rates and so far no takers. Yes, it will eventually find it's way to China.
Today Vlad announced no exports of any commodities until the end of the year......
cowman
Final Approach
But thats probably the oil that was already in transport before the US cuts. Once that oil gone tracking future shipments will be more difficult. The oil black market is huge and finding sellers has never been a problem. Even Iran still sells oil and they've been sanctioned for some time now.
Morgan3820
En-Route
You were correct, oil is down quite a bit today. Glad that the situation has resolved itself. Stocks are rebounding. I am feeling better already. I wonder how far it will go down now that it has peaked?
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Bob Noel
Morgan3820
En-Route
Sorry, I forgot my sarcasm flag. But I am curious why the price did drop so much. What did I miss?
FormerHangie
En-Route
Help may be on the way: https://www.cnn.com/2022/03/09/energy/oil-uae-production-increase/index.html
bflynn
Final Approach
Easiest explanation - oil is fungible. As long as anybody buys Russian oil, the rest of the market is unaffected. China can undo US sanction Ka just by shifting to buying more from Russia.
kaiser
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The pilot formerly known as Cool Beard Guy
SoonerAviator
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I can't imagine where it's ever SOP to get into an elevator in a building inside the country you are actively invading. For this exact reason.