The reason for $100 per barrel!

[Kiadaw]

Source: http://ftalphaville.ft.com/blog/2008/01/03...and-that-trade/

 

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$100 oil and that tradePerhaps Richard Arens just got bored of waiting for oil to pass the magic but meaningless three-figure mark. Or perhaps he wanted a natty print-out for the office loo, a lasting memento of his moment in market history.

Regardless of motivation, it was a single small deal by this independent trader that on Wednesday pushed oil prices briefly to the unprecedented $100 a barrel level, reports Javier Blas in the FT.

Struck on the floor of Nymex at a hefty premium, about 50 cents, to prevailing prices, that trader, named as Richard Arens who runs a brokerage called ABS, bought just 1,000 barrels of crude, the minimum allowed, from a colleague. The result was a divergence of the prices posted on Globex electronic screens at the exchange and through traders that work the floor - and widespread confusion, says the WSJ.

 

Before the $100-a-barrel trade, adds Blas, oil prices on Globex were at $99.53 a barrel. Immediately after the trade, prices went down to about $99.40, suggesting a trading loss of $600 for Mr Arens.

Stephen Schork, a former Nymex floor trader and editor of the oil-market Schork Report, commented:

[Firstcall]

one word "IDIOT"

[Caaa]

I was told if without any speculation, the actual cost of oil should be less than USD70, anything above mean someone is making extra money...

[Stary]

that's not true.

[Caaa]

care to share?

[Seaweed]

so what's the truth ???

[Freestylers09]

i just feel they over speculate the price...push and maintain to it...just like shares,big players or syndicate tend to 'fry and fry'...if notice such trends last few months and know them..bi tang liao some even chase it..kana big loss in the end

[Caaa]

Agreed!

[Stary]

so what's the truth ??? Hur

 

The truth is

 

1) demand has been very strong and it will just get stronger

2) Oil field has been drying up

3) Not enough of rigs and crew worldwide to bring the oil to market fast enough. Between 1990 and 2000, most oil companies were in trouble, staff were asked to go, rigs were abandoned. This is also the time where most oil companies merged to save themselves. When oil price picks up, getting back the rigs and the right people has been difficult.

 

By 2010, oil price will be between 150-200, probably at the higher end of it. This is just the start.

Edited January 8, 2008 by Starry

[Twnll]

I was told if without any speculation, the actual cost of oil should be less than USD70, anything above mean someone is making extra money...

 

 

Someone gotto finance the war in Iraq and Afghanistan...

[Comnao]

you must be either an oil company executive trying to fry up your shares by spreading doomsday rumors or a tree-kisser whom doesn't know how much oil is out there.

 

but you are correct about 1 thing though ... Demand is very strong and growing stronger

 

Haiz !!

[Stary]

you must be either an oil company executive trying to fry up your shares by spreading doomsday rumors or a tree-kisser whom doesn't know how much oil is out there.

 

but you are correct about 1 thing though ... Demand is very strong and growing stronger

 

Haiz !!

 

no...I don't work in the oil industries, but I own an investment forum and I follow such stuff all the time.