so, is /. right?

[acroyear]

A recent /. poll asked the question (silly Cowboy Neal answers removed)

Why are oil prices dropping?
Decrease in overall demand (people are conserving or using alternatives)
Increase in overall supply (they're pumping more, or a new source of oil was found)
China has decreased consumption after the Olympics
Speculators ran out of funding due to the credit crunch
Government conspiracy (Bush administration? Elections?)
The dollar is strengthening

With the vote being what I'd been guessing (without reading up on it) for about 3 weeks now: "Speculators have no cash" over "Decrease in Demand" by a 2 to 1 ratio.

So were they (and I) right?  I haven't had the time to do any research on it...

Comments

[motherwell.livejournal.com]

It could also be Saudi Arabia, or other producer-related interests, lowering prices in response to both the recession and increasing concensus for alternative energy sources.

[cozit.livejournal.com]

LOL... DH was sure that China actually decreased consumption *before* the Olympics (heck, considering just how many places shut down for a few weeks, and the amount of area that was decreed off limit to autos to lower the air pollution somewhat, that's believable), especially as the prices first started to go down just before the Olympics started up. Of course, then those hurricanes mucked up the drilling platforms and some of the main pipelines in the South, so that raised them again, but...

Oh... and the favorite this time of year, every four years? Elections are coming up, so of course the price has gone down - wanna make the incumbents look good, after all. So don't forget to fill up on Election Day - because if that's the case, the price will climb shortly after that date (hey, it's happened before).

[rsteachout.livejournal.com]

The major reasons for the drop are the decrease in demand (sometimes reported as "increase in supply/inventory on hand" which, of course, is always followed in the news report by by saying.... Yea, for reporting the obvious) and the increase in the strength of the dollar.

No surprises on either of these two fronts. The rest of the reasons listed, to anyone who reads about this stuff, is just crazy and nonsensical.

[acroyear70.livejournal.com]

So you don't think speculation decreasing is a factor, or you don't think any decrease of speculation was caused by the credit crunch?

[rsteachout.livejournal.com]

I don't think there has been a decrease in speculation, or at least not enough to affect the market value. Oil futures are still a very active market. All the reports state that the primary reason for the drop in the oil price is that decreased demand has resulted in more oil being on hand in the reserves, coupled with a strengthening dollar (or weakening foreign currency if one prefers to look at it that way0>

[acroyear70.livejournal.com]

ok, though what was with the weakening foreign currency, especially the euro through september and october? we bought before our Italian vacation at about $1.52, but found it only worth $1.36 on our return (those prices don't count the exchange counter's mark-up) and today it's even worse at 1.24. at this point we're just holding on to the 50E we have for the FBMM trip that will include Holland rather than trying to get American dollars back for them.

I would have though the crisis and ever-decreasing interest rates would have made the dollar worse...

[rsteachout.livejournal.com]

If I knew that answer to that, I'd be a wealthy man. :-)

My best *guess* is that as that the ripple effect of the U.S. economic downturn is hitting the other nation's economies and, since relative to the U.S. those economies are weaker in general, thier currencies are now taking the same hit we had earlier.

Really, I've worked in the foreign exchange and foreign currency operations of a (formerly) major foreign-exchange bank (Riggs), and the people doing the trading would give their eye teeth, right eye, and probably half the rest of their body to *know* what events and situations were affecting the markets, how, and especially "why". A big part of it really is speculation and best guess.