Is the price of oil in the middle of a free-fall?

Question

China is shutting down its factories for a month to 'clear the skies' for the Olympics. I'm wondering if this will put a serious dent in the demand for oil in late July and August. (Less people going to work, less commuting, driving, and power needs for factories)

Answer 1

you should really watch "Loose Change" before judging me for my thoughts. 9/11 was an inside job. 1993- who knows and who cares. that is not at all related to Bush's 9/11 Master Plan.

p.s. i hate Rosie O'Donnel

Answer 2

No.  There are buffers against a free fall in the demand for oil.  The independent refiners and the Indian demand for oil and the long term demand from China.  I addition to U.S. demand which is twice what we consume from domestic resources.   The electrical demand do to the pull from all of the U/S. computer should offset any sacrifice on the driving side of "demand destruction."

Answer 3

Jack ... good question that shows you are thinking correctly about oil ... it IS about supply and demand.  Will China's voluntary shut down have a major impact on oil supplies?  Probably not.  Someone else (like the good ole USA) will step up to the plate and guzzle down the crude.

However, the price may be impacted by China's voluntary shut down.  This is because the market assigns prices for spec items based on one of two opinions:  fear and greed.  If investors are afraid the shutdown will affect prices, the price will go down.  If investors think the shutdown is an opportunity to buy, the price will go up.

Still your question shows that you are thinking and using different angles to analyze.  Good for you!  But to ask if oil is in a free fall because of China's actions ... nope ... it is because investors see a chance to secure profits before a "fall" occurs.  If enough people take those profit, the fall occurs.  

If you are considering an investment in any energy related stock, sit tight and watch ... then watch some more.  An opportunity exists, but Mr. Market has to settle down a bit before you should move.

Good luck with your investing!

Uppity Wench

Answer 4

no.  oil prices are primarily results of speculation

Answer 5

no such luck. The price of oil is pausing in its rise because gasoline usually peaks in July. The demand for gasoline drops for the winter as they blend in ethanol. But even without the supply and demand factors, the price of oil could rise because it is not positively linked to supply and demand. For example - if demand drops, they could simply cut production (supply) and the price of oil doesn't drop. When our car doesn't have a choice of where to get fuel, then that's what they call leverage.

Answer 6

Nope. The thing people don't realize is that oil demand is always increasing with or without China while oil supply is decreasing significantly. India and Mexico are purchasing a huge amount of cars also. Not as much as china by far. China's rate of car sales is somewhere near 20,000 cars a day. Saudi itself estimated they are at most half full of they're largest oil reserves. Although we get most of our Oil from Canada anyways. Opec controls the price of a barrel of oil becuase they control 60% of all the worlds oil. If it falls and If is a big if it will only be temporaily.