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AntZ
02-24-2011, 01:57 PM
Crude breaches $119 in frantic trading


By Jamie Chisholm, Global Markets Commentator

Published: February 21 2011 08:31




Thursday 14:35 GMT. Oil’s grip on global investors gets ever tighter, earlier crushing risk appetite with another sharp move higher.

However, reports that Saudi Arabia would try to make up the shortfall from any disruption to Libyan supplies has knocked crude off its highs and helped equities pare losses.

The S&P 500 on Wall Street, which had looked set to open down nearly 1 per cent, is off just 0.1 per cent, helped by an improved reading for US weekly initial jobless claims.

Brent crude had breached $119 a barrel during a period of frantic trading around 0745 GMT as industrial needs were hedged and traders exploited an explosion of upside momentum.

Worries that reduced supplies from Libya may be replicated in other regional producers facing potential political turmoil has led to the world’s oil benchmark jumping almost $17 this week. Brent is trading at $114.27, up 2.7 per cent, as fear delivers extreme volatility to dealing desks.

The scramble to secure output is shown by a steepening “backwardation” futures curve, where contracts for immediate delivery command higher prices than more distant ones.

The spike in crude increases costs for companies and consumers and threatens to dislocate the global economic recovery, pessimists reason.

Godfather
02-24-2011, 06:39 PM
Can someone explain why it is that Canada is producing 1.3 billions barrels a year, and even oil-sand oil needs to be only about 40$ to be profitable, most of which is happening just a few hundred KM away from me in Alberta....

And yet, surprise surprise... I'm now paying the better part of five fuggin' dollars a gallon or 1.30$/liter

All this pure speculation driving up the price of oil 10-30% without any real merit is bullshit...

PorkChopSandwiches
02-24-2011, 06:42 PM
Because we are all being screwed by the "worldwide man"

Teh One Who Knocks
02-24-2011, 06:51 PM
If gas goes up over $4/gallon here, I'll have to start sleeping at work during the week

Godfather
02-24-2011, 07:04 PM
God I don't want a Prius but 50mpg is sounding soooo good right now :lol:

PorkChopSandwiches
02-24-2011, 07:46 PM
Use your bike, great gas mileage ;)

Teh One Who Knocks
02-24-2011, 07:47 PM
I have a 50 mile round trip between home and work :slap:

PorkChopSandwiches
02-24-2011, 07:50 PM
I do 70, so I will continue to drive. I'm just sayin' I bet I could get in and out of LA faster on a bike though, traffic is horrible

Teh One Who Knocks
02-24-2011, 07:55 PM
Going to work in the morning by bike wouldn't be bad, but the last thing I would wanna do after working all day is ride home :lol:

DemonGeminiX
02-24-2011, 07:56 PM
I do 70, so I will continue to drive. I'm just sayin' I bet I could get in and out of LA faster on a bike though, traffic is horrible

:-k

Is it anything like the beginning of Office Space?

PorkChopSandwiches
02-24-2011, 07:58 PM
It takes me anywhere from 1 hr to 2.5 hrs to do 35 miles (one way) if that answers your question :lol:

DemonGeminiX
02-24-2011, 07:59 PM
It takes me anywhere from 1 hr to 2.5 hrs to do 35 miles (one way) if that answers your question :lol:

So the old guy with the walker is faster than you.

:lol:

PorkChopSandwiches
02-24-2011, 08:02 PM
Pretty much. I'm negotiating for home office time this year during my review instead of money. The time I spend on the road, and the price of gas isnt worth driving in.

DemonGeminiX
02-24-2011, 08:07 PM
Good luck with that, man. I don't know if I could work from home. I think my A.D.D. would get in the way.

PorkChopSandwiches
02-24-2011, 08:08 PM
As long as the kids are at school its not an issue for me :)

Deepsepia
02-24-2011, 08:35 PM
Can someone explain why it is that Canada is producing 1.3 billions barrels a year, and even oil-sand oil needs to be only about 40$ to be profitable, most of which is happening just a few hundred KM away from me in Alberta....

And yet, surprise surprise... I'm now paying the better part of five fuggin' dollars a gallon or 1.30$/liter

All this pure speculation driving up the price of oil 10-30% without any real merit is bullshit...

Its a world market. The price you pay is not set locally, because the oil produced in Canada is sold worldwide.

And you do get enormous benefits from the high price of oil -- just look at what a $CAN buys today.

Why does the price of oil spike the way it does? Partly because its a commodity which has to be supplied continuously. There are lots of commodities which, when they get expensive, you just don't buy. You don't buy blueberries in winter, for example. You could -- they'd cost a bundle. But you don't.

Gasoline and electricity aren't like that. By and large, customers can't make tactical switches in their consumption -- if they could, the price would be much steadier.

Instead what happens with a fairly inelastic demand is that, in the face of shortage, the price has to jump up very high to "drive away" some portion of demand so that demand and supply balance. This is a very short-term effect, though. In a few months, the price of a barrel will be back at $85, most likely.