Quote:
Originally Posted by coffeedude
I always thought that when the stock market falls oil/energy prices tend to rise, it seems that's not the case this time around.
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The theory is...
Wall Street passes judgement on oil prices since they use it as a indicator of economic activity. When demand is up, so are prices and other things in the economy.
Those days passed a long time ago since for the past 17 years, the price of oil has been a point of manipulation in commodity trading mainly from the largest banks. Being since the collapse of Enron and the Bankers hired those manipulation artist of the late Enron.
Morgan Stanley is the largest oil traders in the world. They even own and control a fleet of super tankers and a super tanker manufacture in S.America that they use to buy spot oil and just store it away and take it off the market where the pirate's attempt to hi-jack. This places a shortage in the spot market within 90 days where they sell it in the 30,60 and 90 day futures market when the price spikes.
The Saudi and Russian alliance (OPEC+) was to manipulate the price as the sanctions were imposed on Iran and their oil exports... that fell apart as allies were allowed to purchase Iranian oil (they really could not stop it). So the price recently bottomed out and demand for oil really has been unchanged. So how is that a indicator of economic activity ?
Nothing is as it was when most of these rules in trading indicators where made.
Only from the shale play has kept the ability for it to be manipulated a bit more risky. Otherwise, because of this competition, we probably would have oil prices in the $90bl area where it crimps nearly all economic activity and adds inflation to everything.
All these trend line indicators should never be compared together anymore unless you know more about the underlying markets they represent. Whenever I see them doing it, I know someone is trying to sell something that probably should not be purchased. Almost everything is being manipulated in supply/demand in the commodities markets and thereby pricing.
Why ? Because it can be ! Hardly any rules, and those that remain are being overlooked.
This has been the face reality of de-regulation. How do you like it.
It all started here... But see also "The Smartest Guys In The Room"