Tag Archives | crude oil prices

High-frequency trading continues to take markets higher

The blog was very pleased to see the Nobel Prize awarded jointly to Robert Shiller, whose words of wisdom on housing and stock markets it has cited many times. Shiller’s key insight, in his book Irrational Expectations and since, has been to confirm Ben Graham’s famous saying: “In the short term, the market is a […]

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‘The Trend is Your Friend’, until it isn’t

The blog still owns the lapel button it was given when running ICI’s feedstock and petchem trading office in Houston, Texas. Its advice for any trader is excellent – ‘The Trend is Your Friend’. But as all traders learn over time, there are moments when the trend can change. And sometimes, when change happens, it […]

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“A word means just what I choose it to mean”

‘When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ This quotation from Lewis Carroll’s great novel ‘Through the Looking-Glass‘ rather seems to sum up policymakers’ current approach to financial markets. Two recent examples highlight the issue: • […]

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Oil markets risk rapid repricing – Part 2

As the blog discussed yesterday, central banks have now kept oil prices above the historical $10-30/bbl range for 10 years. But can they remain there forever? What might bring them back in line with the fundamentals of supply/demand? And what would be the risks if this happened? The background can be simply stated: • Investors […]

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Oil markets risk rapid repricing – Part 1

Since 1900, as the chart shows, oil prices have never been so high for so long as now. Until 2003, they had only been above $30/bbl for 4 years between 1979-1982, during the OPEC production cuts in the Iran crisis. But since 2004, they have been continuously above this level. The reason is the misguided […]

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“Surplus oil is filling inventories worldwide” – Reuters

Have you ever wondered, as you pay your energy bill or fill the fuel tank in your vehicle, just why oil prices have risen so much on the past decade? The question occurred to the blog when reading a Reuters report of the latest Outlook from the International Energy Agency (IEA). It notes the IEA […]

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High oil prices present recession risk

Oil prices are heading for a second successive year of record annual prices. Last year, Brent averaged $111/bbl and it is averaging similar levels so far in 2012. History suggests this is very bad news for consumers, for companies and for the global economy. The reason is that consumers in most major economies are now […]

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Oil markets have lost their price discovery role

The US spent $6bn on its presidential and congressional elections this year. Apart from expressing the will of the people, it may also prove valuable if it helps to highlight the danger of allowing wishful thinking to override factual evidence on the ground. One example of this failing was last Monday’s forecast by the highly-respected […]

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Goldman Sachs follows the blog on oil prices

The blog is awarding itself and fellow-blogger John Richardson a pat on the back this morning. The reason is that investment bank Goldman Sachs, the largest player in commodity markets, has completely reversed its analysis of oil markets. They now accept our view that there is no fundamental reason for oil prices to be at […]

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Central banks will make global downturn worse

The US Federal Reserve and the European Central Bank have adopted new and aggressive monetary measures to try and boost US employment and stabilise peripheral Eurozone bond markets. Unfortunately, their actions are more likely to increase the chances of a deeper global downturn than to create economic growth. Their previous liquidity injections, undertaken in the […]

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