If oil price is ruled by supply and demand, not speculators, how did oil prices shoot up $25 a barrel today?

Stock Market investors dumped stocks today and ran to the oil commodities market, pushing up the price of oil by $25 per barrel.





Can anyone in their right minds deny it's speculation that drives up the price?





http://news.yahoo.com/story/ap/20080922/鈥?/a>If oil price is ruled by supply and demand, not speculators, how did oil prices shoot up $25 a barrel today?
I guess the neocons are wrong yet again. At least they are consistant.If oil price is ruled by supply and demand, not speculators, how did oil prices shoot up $25 a barrel today?
They did that to opec stating that they are cutting production on oil and the fact that the state have less refineries cause of Ike. Now that the government dumped all that money in to the bail out the next president will have a hard time allocating money to fund alternative power plans.





The ban on short selling also has a lot to do with most of these stock prices going up. Yes if the price of oil goes up then the price of gas goes up, but what im saying is that many things affect the oil price not just stock buying and selling.
It's based on many things. OPEC production, Market instability, Oil Demand, Dollar value, Refining speed, Refining amount, Weather effects it, our demand, commodity trading, Chinese demand, etc. but yes speculation has a role as well, just like it did in the housing market.
Because the Oil producing countries saw that Nancy Pelosi will not allow our country to drill and use it's own resources and that the congress is going on vacation for the until after the new year, so why not, what will America do, except bow down and kiss their muslin feet
I don't know anyone who thinks that speculation doesn't drive the price.





Some people do claim that supply and demand affect said speculation, but surely no one thinks that speculation doesn't play a part in the COMMODITY/FUTURES MARKET.
anyone who pays attention to the oil markets for more than 5 seconds can see that... before the Hurricane even hits... prices skyrocket...





Bush releases off-shore drilling, when Congress still has to release it before drilling is done... prices drop...





both with NO change in actual supply/demand
Distinction without a difference. If speculators bid up the price of oil, they have to be trying to buy it. Speculation is a form of demand. How could it not be?
Oil prices are *not* driven by supply and demand; ignore what the talking-head economists on various news programs might tell you.





*Speculators* set the price of oil; supply and demand play only a small part in their decision-making process.
Supply and demand keep oil prices pretty constant





The dollar is dropping, so it now takes more dollars to buy the same value of oil..





Why is everything a big conspiracy with you left wingers?





Take ECON 101 at your local community college !
Whoever wrote that AP article was smoking something. The rise was due to a short squeeze in a ';thin'; (low volume) market. October contracts had to be filled by COB today.


Speculators got caught!
Because its not ruled by supply and demand, it is a commodity on the spec market.
Oil prices are determined by the future market. People guess on how much gas we will have in 10-15-20 years from now and that determines the prices today
Pure speculation!
Are the refineries back on line from the storm named IKE?





I think this has the most ot do with it right now.
probably because the dollar is worthless





hugs!
How did our oil end up under their sand?
it was the clear signs that the U.S. dollar is going to stay weak.
Sure, I can deny its speculation. At least, I can deny its pure speculation. Some speculation, but mostly ';hedging'; of money in commodities or futures.





1. Investors have money in the form of stock.


2. Congress fails to act quickly in their communist bailout of corrupt banks.


3. Investors panic and feel they need to shift their rapidly declining money SOMEWHERE, ANYWHERE because the sky is falling!


4. The money gets moved into commodities, as it always does during a panic (gold, oil, etc.)





Don't forget, when it comes to ';futures';, we are not always talking about the price of oil. We are talking about the future price of oil. Think of it as ';fake'; oil. Paper oil, so to speak.





What went up was not the commodity oil. What went up was the commodity ';paper oil';, which just happens to be very closely tied to the price of oil. So, a group of people invented a fake product and then slapped a price tag on it. Then people bid on the fake product, turning it into a commodity. So its fake oil backed by real oil. That way, there is the illusion of twice as much oil - real and paper. The free market creating wealth!





So it IS supply and demand. The price of the ';paper oil'; went up to reflect the demand for paper oil. (demand goes up, so supply goes up). Now the ';promise of oil'; (paper oil) can be traded, sold, or eventually redeemed for real oil, if you are in the oil business.





I suppose someone could issue an ';option to buy'; or ';option to sell'; the paper oil. That would create paper-paper-oil. And they do! And then a bank could be formed to issue loans (bonds) aka commercial paper. They could use this paper money to buy options and futures. Then they could buy and sell the options, skim some profit and distribute the rest of the profit to the commercial paper owners. Let's call them hedge funds, because they ';hedge'; their investments in various forms of paper (just like the failing investment banks). And if the price of oil suddenly drops - resulting in credit defaults (is this starting to sound familiar?) These hedge funds are the next group to go up in flames, and will do so in the following months, plunging the US in a very serious recession. And they will be bailed out for trillions. If you have 1 million dollars or more, you can join a hedge fund, at the expense of those around you!





Also, remember that its the ';Law of Supply'; and the ';Law of Demand';. Not the ';Law of Supply and Demand';.





Increase in supply decreases price. Decrease in supply increases price. (effect of supply on price)





Increase in demand raises price. Decrease in demand lowers price. (effect of demand of price)








I suppose it would be best to call them the ';Law of supply with respect to price'; and the ';Law of demand with respect to price';.





There is another set of laws called the ';Law of quantity supplied'; and the ';Law of quantity demanded'; which are actually very different - they relate the price to the quantity supplied / quantity demanded as opposed to the supply / demand to the price (sort of reversed).


(effects of price on quantity supplied)


(effects of price on quantity demanded)





So, oil shot up because people needed a place to dump their extra (real, paper, etc) money before its value evaporated! They tried to ';hedge'; their wealth by investing in commodities. But there were so many, the price blasted upward. Of the paper oil, that is. Who knows what the real stuff is going for. I guess it depends on how much you get.





Have you ever noticed how no one ever mentions gasoline futures? hmmm....





Almost makes me think the oil futures are a diversion...
oil isnt 25$ a barrel, its alot more than that.