Indyphil

Economics of Oil Futures Trading, Part I

I look forward to part II. Thanks for posting this article. I have read some of your others and I got the impression before that you didnt believe in the fundamentals driving the oil market. Perhaps I mis-understood.

Perhaps the question to address is not so much the overall relationship between futures and market fundamentals, but how much volatility the speculators bring to the table. Does less trading volume = slower changes and less "noise".

Volatility: It's the Oil, Stupid

My personal opinion is that we were overpriced at $135, the market is taking a breather after we saw demand destruction in the US. We know demand lags price considerably. I think youve got to have some big stones to go long for the next few weeks.

We really need to watch Chindian demand to understand the longer term fundamentals, and of course not ignor what Al-Naimi and friends are up to. More personal opinion but I think folks are wising up to the Saudi bluff. 12Mbpd capacity? Sure, and theres this bridge for sale too. 250 Billion barrels of 2P reserves? Hmmmm....