in talking about oil traders making a lot of money in this situation, we have to consider that the Saudis are likely front running the oil trade based on inside info; they're the ones who knew ahead of time that they were going to start a price war...they had to be shorting oil or buying puts before they pulled the trigger, and probably made a bundle on the price drop...i think the Dubai Mercantile Exchange is the 3rd largest oil trader, after New York and London, and probably the one trading on the most inside information.
Agree 1000%. I didn't know the specifics -- size of the various exchanges, etc., -- I remember the Saudi platitudes of yester-years when they said it was their responsibility to maintain an orderly market or something to that effect. What a bunch of hogwash.
there's an article up on CNBC forecasting $20:
ReplyDeletehttps://www.cnbc.com/2020/03/08/opec-deal-collapse-sparks-price-war-20-oil-in-2020-is-coming.html
Thank you. We live in interesting times. Who would have predicted this back in the 1980s?
Deleteactually, oil fell from over $30 to around $10 back in the 80's (i just checked)
Deletebut you're right, i'm sure no one predicted it back then either..
I had forgotten that, but North Dakota did have a mini-boom in oil back in the early 80s and it quickly went bust. That must have been the reason.
Deletein talking about oil traders making a lot of money in this situation, we have to consider that the Saudis are likely front running the oil trade based on inside info; they're the ones who knew ahead of time that they were going to start a price war...they had to be shorting oil or buying puts before they pulled the trigger, and probably made a bundle on the price drop...i think the Dubai Mercantile Exchange is the 3rd largest oil trader, after New York and London, and probably the one trading on the most inside information.
ReplyDeleteAgree 1000%. I didn't know the specifics -- size of the various exchanges, etc., -- I remember the Saudi platitudes of yester-years when they said it was their responsibility to maintain an orderly market or something to that effect. What a bunch of hogwash.
DeleteThey get to blame it on the Russians (with some justification...and seems to be sticking).
DeleteThank you for that data point. I'm doing a "special" post on this "crisis" -- Part One has been posted:
ReplyDeletehttps://themilliondollarway.blogspot.com/2020/03/the-opec-spat-part-one-march-9-2020.html.
I'm doing it in parts to let folks "move through" my thinking process.
Your one-line comment is very, very helpful. Thank you.