What Will Move Oil: Obama's Package or Falling Chinese Demand?
Answers
2222 points
readytoretire answered one year ago …
Obama's package will not move the price of oil for a while. The continuous aging of the US cars will do more to cause oil price impact. As we exchange the lower mileage vehicles for higher mileage, it will restrain the price increase due to the economy improving.
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3963 points
MNSL answered one year ago …
I do not think those who manipulated oil market and OPEC can move oil now.
People like readytoretire,BoxCar have some valuable facts and information.
Of course there are some factors that can move oil suddenly in the short run for one week or so. But it will come down sharply.
731 points
thinker70 answered one year ago …
In the short term there can be many factors that move the market, BOTH items mentioned included!
Long term the declining production of older fields (Cantarel in Mexico, some North Sea deposits as well as Saudia and other mideast sources as well) will mean a diminished supply! Once demand ramps up again as economies recover, (whether that takes the 1st quarter of 09 or the whole year) supply will NOT expand rapidly as the price of crude is far too low to allow development of any major new fields!
Finding them is one thing, but bringing them into production not only takes TIME, but also BILLIONS in investment that may not readily be available for some time until the present financial mess is resolved.
678 points
BoxCar answered 11 months ago …
We only get 20+ gals of FUEL out of a 43 gal barrel of Oil (like other packages a
55gal oil drum was "downsized" sometime ago) The other 20+gals of Oil go to
produce other petrochemical products such as the plastics everything is made of.
The impact of demand destruction for houses, appliances, autos, you name it, means the DEMAND for products drys up with subsequent fall in demand for OIL.
So unless demands for products picks up, the price of OIL will not move very far
esp. in light of the trucking industry cutting fuel consumption almost in half by a
simple act this Xsgvg of installing 64mph speed limiters on trucking fleets. By the
laws of aerodynamics, a 20% reduction in speed results in 40% fuel savings.
Divide speed by fuel mileage to get fuel consumption. 64mph/8mpg = 8gal/hr
where 55mph/11mpg = 5gal/hr. To save 3gal/hr for how many trucks, its no wonder
we have a surplus of fuel and the prices have come down- Haste makes Waste.
2183 points
ChaosNantuko answered 11 months ago …
In the short and intermediate term, oil prices will probably stabilize, maybe even drop another 25% from current levels.
In the long term though, I agree with Thinker. There were fundamental reasons oil went higher. Maybe they were exaggerated with respect to timespan, but once the economy recovers, we will be back in a situation where the developing world is looking to use more and more oil, the developed world will ramp back up to its wasteful ways in terms of oil consumption, and the long term realities will force oil up.
