Crude Oil Prices Collapse - FDL

[WillyT]

Crude Oil Prices Collapse
By: David Dayen
Thursday May 5, 2011 1:28 pm

<snip>

The New York Times really doesn’t want to mention speculation in this story about oil prices plunging today, but the first analyst they cite gives the game away:

After four months of surging higher, oil prices plummeted by almost 9 percent on Thursday as traders worried that American drivers were beginning to balk at paying nearly $4 a gallon of gasoline.

Energy specialists had a variety of explanations for the drop, including Thursday’s weak employment data and a strengthening dollar that tends to make all dollar-denominated commodities cheaper in dollars and more expensive for holders of other currencies.

“Pop goes the bubble,” said Michael Lynch, president of Strategic Energy and Economic Research, a consultancy firm. “It seems unlikely you will see any tightening in the market in the coming months. The worst of the political threats have past us.”

The word “speculation” never appears in the article. The closest they get is calling it a “price correction.” And a separate analyst says, “The fundamentals have not been strong enough to justify these levels.” So I think we can surmise. The oil bubble was getting too big to be sustainable, affecting the broader economy in a variety of ways. So the speculators ran for cover.

<snip>

More: http://news.firedoglake.com/2011/05/05/crude-oil-prices-collapse/

:kick:

[aquart]

1. Please explain why we can't dig them out from under their rocks

And hang them for war profiteering?

I believe it would give the economy exactly the jolt of confidence it needs.

And those are pictures we'd publish. Poster size for the subways around Wall Street.

[bobbolink]

2. C'mon now... we have to move on..........

:nuke:

[Ikonoklast]

3. Speculative bubble bursts, prices collapse.

This is not a normal 'correction', it is gamblers fleeing their positions.

There has been an adequate supply of crude oil on the world markets all during the huge price run-up, which was all due to unrest in the Middle East and speculators betting that supply would be interrupted.

[Drahthaardogs]

4. They do this every time.

Load up the mule until he buckles under the weight. Then they stand around and wonder why they don't have a mule anymore.

[Myrina]

5. Exactly - for reference, see "Enron: CA Energy Prices 101"

D'oh!

[aquart]

6. Pity no animal lover passes a law saying they can't have any more mules.

[robinlynne]

7. i love the way you think!

[Shagbark Hickory]

8. Don't get all excited just yet. Remember all it takes is one little uprising and

the bin laden story to fade and it will be back up there again.

[girl gone mad]

9. Any mention of the bailouts, Bernanke's policies and the extension of the Bush tax cuts?

Those are the major factors driving the speculation.

As long as there is too much money sloshing around at the top, this type of activity will continue. The rich want easy returns with no work and minimal risk. Unfortunately, we've bailed them out of all previous recent crashes and made it even easier and cheaper for them to borrow, gamble and game the system than ever before.

[WillyT]

10. Kick !!!

:kick: