Although many people do not realize it, open bidding at the New York Mercantile Exchange in New York City sets the cost of crude oil. For all intents and purposes, this open bidding, or open outcry, really is the same as an auction. The New York Mercantile Exchange, the Chicago Board of Trade, or any other futures exchange for that matter, is no different than a great big financial Ebay.
The petroleum price as quoted in news usually relates to the spot price per barrel (159 liters) of either WTI/light crude (traded on the New York Mercantile Exchange (NYMEX) for delivery at Cushing, Oklahoma) or of Brent (as traded on the Intercontinental Exchange-ICE, into which the International Petroleum Exchange has been incorporated) for delivery at Sullom Voe). price of oil? It really does not matter how much you think you are knowledgeable about price of oil, see payday advance charlotte, and learn so much more about this topic..
It is in vogue to think of rich, evil, oil companies setting high prices on their product, but actuality this isn't what happens. It is true that oil companies be involved in the bidding. However, anyone is free to participate. Many investors/spectators are also participate in the process besides the oil companies bidding for crude oil.
Price Of Oil; More Info
When the price of oil rises, the price of the oil company stock also rises. Investing in such stocks involves finding the best company and acquisition of low-priced stocks that have a great future projection. You can see the increase in the stock prices of such companies, as the prices and business of crude oil boom. As the boom recedes, the prices fluctuate and in many instances, fall. get a payday loan today, click that link for more details..
When speculators, or companies who're hedging, bid in the open market on futures exchanges, they attempt to predict future prices by using two different types of indicators.
The first types of indicator speculators/hedgers will use are fundamental indicators. In other words, they attempt to determine what the given supply will be found in the future for a particular product. They will likewise attempt to predict what the future demand will be in respect of the same product. If they're accurate, they'll be able to learn whether the price of this commodity will rise or fall.
The second types of indicator speculators/hedgers will use are technical indicators. Investors feel they can simply look at charts and predict whether the cost of the commodity is rising or falling with technical indicators.
In the case of crude oil, some time ago fundamentals indicated that its price would be rising. However, there is some controversy about just how high the fundamentals tell us the cost of crude oil should be right now.
As far as technical indicators are concerned, when the cost of a commodity has been going on for a while in one sense or another, these indicators will no longer be useful because all they do is tell you which way the price is headed. They say nothing as to how far it should go.
Whatever the result of the oil bubble of 2011, it was quite a bumpy ride for bp share prices in 2011. In recent months, the cost of a barrel of oil has been stable at around $95 per barrel, and the stock prices for the large oil companies have also been quite stable in recent months. Since oil is such a widely used commodity, the price of oil is a key indicator in the general health of the global economy, and a supply disruption can have fatal effects.
In the 1990 's, there was a tech stock boom. Very shortly into this boom, tech stocks became overbought. In other words, the tech stocks were n't, in reality, worth the high cost they were selling for. A year or so later, they became extremely overvalued. That did not stop their price surge though, because the price of tech stocks were increasing very quickly, they were making money for people. So, more buyers kept coming into the market.
Tech stocks made millionaires out of a bunch of people. All a speculator had to do was buy tech stocks, and then hopefully sell them before it was still too late. After a few years had gone by, tech stocks were so expensive, new investors just could not afford them. The price of the tech stocks stopped appreciating without new buyers coming into the market. When that happened many speculators saw no purpose in holding onto their tech stocks. So, naturally they began to sell them.
As you probably remembered, the tech stock market suffered a complete crash once selling became the trend. The NASDAQ tumbled from 5, 000 to 1, 100. Fortunes were lost during this time. Once the NASDAQ had settled around 1, 150, the price of tech stocks had found their equilibrium. In other words, after bouncing around a bit they began to trade at their true worth.
It looks very much like the cost of a barrel of crude oil just has to hit $100. There is no real fundamental reason behind it except for it seems to be what the market psychology is dictating. Once it reaches $100 per barrel, I cannot see what possible indicator would tell anyone that this would represent the time to invest in it.
While I, or anyone else can predict the future; I can look at the past with the first man among them. When I look at what's going on in the crude oil market, I just cannot distinguish anything different from what really happened to the tech stock market of the '90s, and most recently the housing market.