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Home >> Stock Forums >> "It's hard to say if futures cause price rises"

"It's hard to say if futures cause price rises"

ratAphooey said: "Here is an interesting comment from an Indian economist who was speaking about the effect of futures on commodity prices. [quote] Do you mean to say that there is no direct link between the futures market and price rise? The point is that, by and large, futures reflect what people think will happen. Futures are projections being made by people who are trading on the basis of whatever information they have. So, it is predicting prices. Now, if that prediction is taken to be valid by a lot of other people, it will affect how people react in the spot market. And inflation prevails only in the spot market not in the futures markets. There are lots of things that happen in the spot market that have nothing to do with the futures market. You must have studied recent inflationary trends. Is there any proof that price rise occurred due to futures trading? It is very difficult to say. The data set is so short that no statistical conclusion is possible. [/quote] It seems that prices rise because of futures but can all of the price increases be related to speculation? Source: [url=http://economictimes.indiatimes.com/Opinion/Interviews/Its_hard_to_say_if_futures_cause_price_rise/articleshow/msid-2969736,curpg-2.cms]IndiaTimes[/url]"

AlfredSokol said: "Oil prices are rising because of speculation. That, plus real demand issues. I think a combination of both is required."

Mike Marino said: "All the above has to do with it, THERE IS NO SHORTAGE! Think about, the only reason why gas is so much is beacuse the average person doesnt realise that theres no shortage. Yes there is a limited supply but were pumping up more oil then ever, I have heard we have enoph gas to last us at least 100 more years. Taking into account all of these things gas should be about 2.30 give or take a 25 cents. People think beacuse of the war in the Middle east, were trading less oil, or the oil is being burned. THIS IS NOT TRUE. Companys are just being pigs."

StockHunter said: "[QUOTE=Mike Marino;69458]All the above has to do with it, THERE IS NO SHORTAGE! Think about, the only reason why gas is so much is beacuse the average person doesnt realise that theres no shortage. Yes there is a limited supply but were pumping up more oil then ever, I have heard we have enoph gas to last us at least 100 more years. Taking into account all of these things gas should be about 2.30 give or take a 25 cents. People think beacuse of the war in the Middle east, were trading less oil, or the oil is being burned. THIS IS NOT TRUE. Companys are just being pigs.[/QUOTE] You forget the growth in foreign countries is the #1 cause of the rise in oil (although this week it's been concerns over iran). If it wasn't for the other countries subsidizing their prices, demand in those countries would have dropped when the price went up."

Roger said: "rataphooey: [QUOTE]It seems that prices rise because of futures but can all of the price increases be related to speculation? [/QUOTE] I dont think the effect of speculants is that strong. It is something the opec tries to let us believe. In fact speculant even can have a stabilizing effect. On the market speculants namely sell if prices increased a lot, and buy after the price decreased a lot. Besides that you should know that speculative demand is not equal to physical demand. As said speculants sell on time, which prevents the forcing up of prices. mikemarino: [QUOTE]All the above has to do with it, THERE IS NO SHORTAGE! Think about, the only reason why gas is so much is beacuse the average person doesnt realise that theres no shortage. Yes there is a limited supply but were pumping up more oil then ever, I have heard we have enoph gas to last us at least 100 more years. Taking into account all of these things gas should be about 2.30 give or take a 25 cents. People think beacuse of the war in the Middle east, were trading less oil, or the oil is being burned. THIS IS NOT TRUE. Companys are just being pigs.[/QUOTE] I dont fully agree. the oil market is very tight. We maybe pump more oil than ever, but we also need more than ever. Beside that there are risk factors. The situation in the middle east is taken into account. My opinion is that the current oil price is fundamentally justifiable. We just need to accept that oil is more expensive. however I see many opportunities in the mid to longterm with other energy sources. Because of the high oil investments in this rises. This puts pressure on future oil demand. See for example the reaction of the opec lately. More economic cars are appearing on the market, and also in other sectors energy saving innovations appear."