Of all the factors that the market can focus on for the oil industry it has chosen, drumroll please - THE WEATHER.
I now understand why one of the largest hedge funds went belly up playing the energy market.
So for everyone who is playing the downside now, what might make them have to consider a new mortgage on the house?
First of all, the weather might turn cold. The same people who are predicting warm weather are those who said we would have a rough hurricane season. And running investments based on weather prediction would seem little better than heading to Vegas.
The Middle East could blow and it really just seems like a matter of when and not it. Colin Powell just advised not to send any more troops even on a temporary basis, but to get the hell out and give it to the Iraqis. If things ignite in the Middle East how much effect do you think the weather is going to have on oil prices? That's right - none.
Normal supply and demand. It's winter sure but does that have any real effect on Indian and Chinese consumption? Inventories are being depleted and OPEC is cutting production. Oil prices usually go up by 10% at this time of the year and, yes, the warm weather has already been factored into that prediction.
What this all boils down to is that this is a great time to average down and to hunker down and wait for the unavoidable gradual turn or the Middle Eastern explosive turn.
People playing the downside should keep those loan applications handy...
That's great - all of your spouting about what effects the price of oil on a message board of a company that drills primarily for natural gas.
The fact is that NG futures are volitile for many reasons & why shouldn't weather be a major reason to buy or sell NG? In the short term it is perfectly logical for the front running futures contracts to trade on weather forecasts. They both relate to events likely to occur in the NEAR future....
It's pretty funny what influences stocks, especially ones in the energy sector.
The Middle East is the proverbial ticking time bomb. Bush's plan never worked and now we are f-ed.
To get back to your point on the weather and the flippacy of the market due to it. In school I took an elective "The Weather".
The professor started the class on the first day by saying
"Do not ask me if we are going to get a lot of snow this winter. That question is appropriate in a climatology class. Weather is not something that can be graphed or predicted accuratly beyond a small frame of time. Our current weather today is affected by the type of air mass that is present. These air massses don't stay long."
All it takes is the jet stream to do is dip down close to Florida and we all get the air mass that has been in Canada. It's not rocket science and I'm sure these traders know this.
Yeah, it's really warm up here in the Northeast. They just said on the local news a couple nights ago that this was similar to about 10 years ago. We didn't get our first snow until Christmas and then we ended up getting over 100 inches.
Sorry for going off on this tangent but betting on the weather is like flipping a coin. It's all random past 10 days.