Crude Prices Fall Below 35 Dollars,,,Included is a very bad sign for the economy.

[Stuart G]

..In a story at Yahoo... these paragraphs are included..

http://news.yahoo.com/s/ap/20090115/ap_on_bi_ge/oil_prices

Prices have fallen 27 percent in just a week and may hit new five year lows, analysts said.

"It was very predictable that January was going to be ugly, but I'm not sure if anyone thought it would be this ugly," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

"Kloza said trucking companies have seen an huge drop in business as orders dry up, just one example of how demand for energy has fallen away.". ...

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This is a very very bad sign. I have noticed much less traffic on roads lately. I wonder if others see the same.

[Deja Q]

1. I avoid rush hour when possible - I cannot say.

[Stuart G]

2. I travel rush hour once a week..

It does appear to be less crowded on many occasions. I have not noticed less truck traffic though, but maybe someone else has.

[The_Casual_Observer]

3. You would never know it by the traffic in So Cal. It's worse than ever.

[notadmblnd]

4. Losing a half a million jobs a month has a way of making rush hour easier

as we lose jobs, demand will continue to fall.

[NightWatcher]

5. if crude is down why has gas jumped 20 cents in a week?

[Kalyke]

7. OPEC

http://www.bloomberg.com/apps/news?pid=20601087&sid=aMXll5WuLN5w&refer=home

[nc4bo]

9. Well alright then..

“We are working hard to bring the market in balance,” al- Naimi said as he arrived at his hotel in New Delhi today. “We will do what it takes to bring the market in balance.”

:scared:



So what is this "balance" and will the global economy accommodate it? Didn't I read here somewhere that they're looking for $75-$100 a barrel? I see $75 at the end of the article.

So I guess they'll dry up the product until the price of oil = the price of gold, then what?!

:nuke:

[Statistical]

8. Gas prices are based on current refined prices.

Oil sold today will become gas in about 6 weeks.
6 weeks ago the oil sold to refineries was much much higher.

Earlier when gas prices were falling oil was actually rising the reason is that gas is based on the price of oil at the time it was refined.

Another way to look at it is the gas you buy today is made from (and priced up) $45 barrel oil sold in December.
In Febuary the gas you buy will be made from (and priced up) $35 barrel oil sold today.*

That is a slightly simplified view because retail outlets attempt to hedge their prices somewhat via future contracts to lock in certain rates but generally the price of gas is based upon the price of the oil it was made from and the process is about 6 weeks.

[glowing]

6. Yes, but the price at the gas station is going up. What gives?

[Statistical]

10. Gas lags oil prices by about 6 weeks because

Oil sold today will become gas in about 6 weeks.
6 weeks ago the oil sold to refineries was much much higher.
Despite oil being lower today the gas you pump today was made from the more expensive oil bought last month.

Earlier when gas prices were falling oil was actually rising the reason is that gas is based on the price of oil at the time it was refined.

Another way to look at it is the gas you buy today is made from (and priced up) $45 barrel oil sold in December.
In Febuary the gas you buy will be made from (and priced up) $35 barrel oil sold today.*

That is a slightly simplified view because retail outlets attempt to hedge their prices somewhat via future contracts to lock in certain rates but generally the price of gas is based upon the price of the oil it was made from and the process is about 6 weeks.

[Romulox]

11. Wrong price INCREASES tend to happen within hours of an increase in crude prices

Decreases take months.

(It's because the price of oil is fixed at both the wholesale and the retail level.)

[Statistical]

12. WRONG.

(Just using your confrontational style).

It is pretty easy to disprove your "analysis".

Open up chart of retail gas prices and oil spot price for last 3 months.
Overlay the two charts.
You will notice a period of time where gas was FALLING and oil was RISING.

As a proxy for spot prices you could use front month future prices for oil (chain: CL) and gasoline (chain: RB).

Generally speaking in a long term rising or falling market the two will have the same direction however right now we have a lot of volatility so the two charts diverge.

[Romulox]

13. The facts on the ground don't support your thesis.

What you describe might be how it might work if the price for gasoline weren't fixed at both the wholesale and retail level. But it is. :hi:

http://www.latimes.com/business/la-fi-gas13-2009jan13,0,2545301.story

http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html