Gold prices don't go up just because jewelers need more gold, they go up because gold is an investment. The same has happened to oil. |
Iran is going to make a political point. |
It's a bullish signal to the market. |
It's purely rhetorical. In order to have these [oil] contracts, you have to have a lot of people invest in them and most of those people are in places such as New York and London. |
Ivan had a long, lingering effect because of the damage it caused and because it hit the market with a perception - and a reality - of a lack of supplies. In that sense, it heightened the fear of hurricanes this year. |
OPEC is an anachronism today. This is not a market where suppliers have to manage any spare capacity. They cannot manage the short-term risk, which is going to be on the upside. What we're seeing here is a demand shock, but everybody is looking to OPEC as if it were a supply shock. |
Restarting a refinery is a very delicate operation. These things can blow up. They are complicated, old and cranky. |
The crunch is on refineries. The global market right now is driven by the product market in the United States, which is why the situation is pretty bad. |
The physical market is fairly tight. |
This was a big reminder of how tight the system is. And what Katrina did is make the system even tighter going forward. |
We have a supply shock. How high prices go will depend on how quickly refiners can get back on. |
We have a supply shock. How high prices go will depend on how quickly refiners can get back on. |
We have lost a lot of supplies at a time when we were very vulnerable. How high prices go will depend on how quickly refiners can get back on. |
We have lost a lot of supplies at a time when we were very vulnerable. How high prices go will depend on how quickly refiners can get back on. |
You have all the elements to push the price up: high demand, tight supplies, tight refining capacity, interruptions in supplies, geopolitical tensions, Iran, Nigeria, etc.. The upside is bigger than the downside, so the money is piling in. |