Dr.Masih Rezvani

Oil Prices Have Become Unpredictable

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Oil prices used to have a predictable seasonal swing. They spiked in the spring, as oil traders anticipated high demand for summer vacation driving. Once demand peaked, prices dropped in the fall and winter.

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Consumption, which is differentiated from "demand," has changed.  The old-style motor vacation trip to distant places in this Continent is fading. This is especially true among the working class folks, as they no longer are flush with discretionary cash.  In short, more people are getting more poor.  That lowers both overall travel demand, and also the length of those trips.  For example, a family in Ohio might go to a vacation lodge in Western Pennsylvania instead of travel to Yellowstone Park in Wyoming, 2,500 miles one-way.  That is a big difference. 

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It's the algos.  F-ing algos.  

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7 hours ago, Jan van Eck said:

Consumption, which is differentiated from "demand," has changed.  The old-style motor vacation trip to distant places in this Continent is fading. This is especially true among the working class folks, as they no longer are flush with discretionary cash.  In short, more people are getting more poor.  That lowers both overall travel demand, and also the length of those trips.  For example, a family in Ohio might go to a vacation lodge in Western Pennsylvania instead of travel to Yellowstone Park in Wyoming, 2,500 miles one-way.  That is a big difference. 

As far as the old family vacation is concerned, is it ‘more people getting more poor (?)’ or is it the fact that gasoline is so much more expensive now, than say in the 60’s through the 80’s that it is simply cheaper to fly?

Regarding ‘more people getting poorer’, is this a dig at income equality? SOME people are getting poorer due to bad career decisions, bad spending habits, poor work ethic, being taxed to provide a social safety net for others through programs being systematically scammed, etc...

Granted, some people get rich on the backs of others, no doubt about it. But many more get wealthy, even extremely wealthy simply through hard work, intelligence and common sense. I would be embarrassed and ashamed to ask, or force them, to distribute their wealth to others simply because those others ‘didn’t make as much’.

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14 hours ago, Zhong Lu said:

It's the algos.  F-ing algos.  

The recent turmoil has unnerved many investors, but two other debacles stand out as having first crystallised the fear that algorithms are making markets more fickle and fragile. 

At 2:32pm on May 6 2010, US equities suddenly and mysteriously careened lower. In just 36 minutes the S&P 500 crashed more than 8 per cent, before rebounding just as powerfully. Dubbed the “flash crash” it put a spotlight on the rise of small ultra-fast, algorithmic trading firms that have elbowed out investment banks as the integral intermediaries of many markets.

HFTs as mysterious, investor-scalping antagonists “rigging” the stock market. 

A few seconds of lag within the fibre optic network opens the window for the black art to be manipulated.

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It's not only Algos, it's players with the ability to use cash like oil.  The futures markets are settled in cash for the most part.  That means no oil need be present to sell short 1,000,000 contracts representing 100 million barrels of production.  I do think though that there must be some limitation on that and the Cushing storage facility is part of it.  So going forward with the new pipelines taking oil away from the Permian to the coast will reduce the availability of any oil from Cushing that might need to be used for settlement and that could reduce volatility and raise prices on the futures exchange.

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16 hours ago, Jan van Eck said:

Consumption, which is differentiated from "demand," has changed.  The old-style motor vacation trip to distant places in this Continent is fading. This is especially true among the working class folks, as they no longer are flush with discretionary cash.  In short, more people are getting more poor.  That lowers both overall travel demand, and also the length of those trips.  For example, a family in Ohio might go to a vacation lodge in Western Pennsylvania instead of travel to Yellowstone Park in Wyoming, 2,500 miles one-way.  That is a big difference. 

It always amazed me that that type of holiday appealed in the USA which traditionally has such poor annual leave provisions for workers compared to say Europe. 

 

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Historically speaking, Americans worked more hours per week than just about any other developed nation and had a very strong work ethic. This is likely due to not having the huge social programs to take care of them as was common in Europe.

With such a vast country with such a variety of vacation destinations, the ‘road trip vacation’ became a looked forward to adventure every year.

You say “poor annual leave provisions” as compared to Europe, we would say the European leave provisions were extravagant. All depends on if you are a ‘the glass is half empty’ or ‘the glass is half full’ sort of person.

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51 minutes ago, Douglas Buckland said:

You say “poor annual leave provisions” as compared to Europe, we would say the European leave provisions were extravagant. All depends on if you are a ‘the glass is half empty’ or ‘the glass is half full’ sort of person

I would suggest that the difference is in "paid days off."  In the USA, most employers will grant you all the time off you want, within reason, just that your paycheck stops while you are gone.  You can get a Paid vacation let us say for two weeks, then if you take two more, you are on your own dime.  Europe takes much longer paid vacations.  I recall at one point France was a month-long paid vacation.  The handicap to that system is that employees become expensive, so there is an incentive to replace labor with capital, in the form of machinery.  You end up with less employed, and ultimately that develops into a permanent underclass of unemployed.   And that has sobering destabilizing implications for society. 

Somebody has to pay for the unemployed, or that devolves into crime.  Are you better off if everyone is working, with less paid vacation, or if you have a permanent unemployed class, and they cost money in the form of crime:  shoplifting, street theft, home invasions, muggings.  You tell me. 

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In my opinion, it is unpredictable at present to predict the price of oil for world-wide reasons such as China, Iran, Russia, and the United States.
There is a chance of tension at any moment
There is a chance of agreement at any moment

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I agree, the world has become more unpredictable making it difficult to predict where the price should be. Until there is clear direction, I believe we are going to see this vitality for a while.

GK

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On 9/4/2019 at 8:14 AM, Douglas Buckland said:

Historically speaking, Americans worked more hours per week than just about any other developed nation and had a very strong work ethic. This is likely due to not having the huge social programs to take care of them as was common in Europe.

With such a vast country with such a variety of vacation destinations, the ‘road trip vacation’ became a looked forward to adventure every year.

You say “poor annual leave provisions” as compared to Europe, we would say the European leave provisions were extravagant. All depends on if you are a ‘the glass is half empty’ or ‘the glass is half full’ sort of person.

Not only was the road trip destination appealing, the drive across this country offer a myriad of other thins to see along the way as well. So the trip could easily have been broken up by driving for so many hours and then stopping for a couple and visiting some attraction to get a break. It is so hard on the children to be couped up in a car for 8-10 hours without anything more than a RR & fuel/food stop to break the monotony up. There is so much to see out there it isn't hard to plan something like that along the way. Back then we didn't have the electronics like we do now either, so our parents had to help keep us entertained.

And I agree about the vacation in the US, never enough, never enough.

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20 hours ago, Dr.Masih Rezvani said:

In my opinion, it is unpredictable at present to predict the price of oil for world-wide reasons such as China, Iran, Russia, and the United States.

The "price of oil" has nothing to do with any of this.  There has been, historically, enough oil for everyone.  When was the last time you pulled into a filling station and was told there was no gasoline to buy?

The price of oil futures, which is what I suspect you mean by "the price of oil"  (even if the future is only one day away) is set by the oil traders, and their motivators are Greed, and Fear.   And that's it.  Oil pricing has zero to do with world events, or trade deals, or any of it.  It is nothing more than the cumulative expressions of Greed, and Fear. 

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1 minute ago, Jan van Eck said:

It is nothing more than the cumulative expressions of Greed, and Fear

And Trump controlling it too. 

#puppet

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On ‎9‎/‎4‎/‎2019 at 2:14 PM, Douglas Buckland said:

Historically speaking, Americans worked more hours per week than just about any other developed nation and had a very strong work ethic. This is likely due to not having the huge social programs to take care of them as was common in Europe.

With such a vast country with such a variety of vacation destinations, the ‘road trip vacation’ became a looked forward to adventure every year.

You say “poor annual leave provisions” as compared to Europe, we would say the European leave provisions were extravagant. All depends on if you are a ‘the glass is half empty’ or ‘the glass is half full’ sort of person.

Well in Europe I get 6 weeks paid annual leave. I understand the typical American gets 2 weeks.

Interpret that as you want but 99.9% of rationale people will interpret 6 weeks as better provision from the employees perspective than 2.

---------------------

A couple of years ago my wife visited one  of her employers factories in Cincinnati. The advice from all the staff she met was DON'T  EVER CONSIDER ACCEPTING A SECONDMENT HERE BECAUSE THEY WILL WORK YOU TO DEATH.

From her observations most the staff were:

  • Obese
  • Depressed
  • Looked chronically ill

The plant had massive turnover of staff

The management were sociopathic - the Engineering manager she liaised with was leaving because they wouldn't even give him time off to spend with his terminally ill father.

Despite being more modern the plants productivity was several % points lower than a comparable plant in the UK.

Don't confuse work ethic with presenteeism.

 

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On ‎9‎/‎4‎/‎2019 at 3:12 PM, Jan van Eck said:

I would suggest that the difference is in "paid days off."  In the USA, most employers will grant you all the time off you want, within reason, just that your paycheck stops while you are gone.  You can get a Paid vacation let us say for two weeks, then if you take two more, you are on your own dime.  Europe takes much longer paid vacations.  I recall at one point France was a month-long paid vacation.  The handicap to that system is that employees become expensive, so there is an incentive to replace labor with capital, in the form of machinery.  You end up with less employed, and ultimately that develops into a permanent underclass of unemployed.   And that has sobering destabilizing implications for society. 

Somebody has to pay for the unemployed, or that devolves into crime.  Are you better off if everyone is working, with less paid vacation, or if you have a permanent unemployed class, and they cost money in the form of crime:  shoplifting, street theft, home invasions, muggings.  You tell me. 

Works well if you are a contractor on $600 a day and can flex your holidays accordingly.

Not so great if you are on $9 an hour at Walmart and the School holidays are coming up.

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5 minutes ago, NickW said:

Not so great if you are on $9 an hour at Walmart and the School holidays are coming up.

The people on the bottom end of the scale receive cash injections through federal and state tax credits known as "Earned Income Credits."  

This is not to suggest that the current WalMart-type wage scales in Retail are reasonable or equitable.  It is painfully obvious that they are neither.  I credit that to a lack of unions. 

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4 minutes ago, Jan van Eck said:

The people on the bottom end of the scale receive cash injections through federal and state tax credits known as "Earned Income Credits."  

This is not to suggest that the current WalMart-type wage scales in Retail are reasonable or equitable.  It is painfully obvious that they are neither.  I credit that to a lack of unions. 

This was the point I was trying to make before that circumstances outside of ones control limit opportunities.  Imagine being a single parent and school holidays are coming up and you have the sum total of 2 weeks paid leave and $10 an hour (plus any available welfare)  doesn't leave much provision for taking weeks of unpaid leave to keep an eye on the kids.

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7 minutes ago, NickW said:

This was the point I was trying to make before that circumstances outside of ones control limit opportunities.  Imagine being a single parent and school holidays are coming up and you have the sum total of 2 weeks paid leave and $10 an hour (plus any available welfare)  doesn't leave much provision for taking weeks of unpaid leave to keep an eye on the kids.

All true.  That said, the European system also introduces substantial barriers to employment and its own inefficiencies, which taken as a whole have the perverse effect of creating a stagnant workforce need.  The result, for example, in France is large numbers of entirely employable males, and no jobs.  Those men then end up receiving State payments, essentially a form of perpetual welfare.  That does nobody any good. 

None of which excuses the inexcusable.  Paying your staff so poorly that they have to rely on govt supplements such as Food Stamps is just pathetic.  And that is especially so for a corporation as astoundingly wealthy as WalMart  (which, I might add, was built on the shoulders of very poorly paid workers). 

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30 minutes ago, NickW said:

From her observations most the staff were:

  • Obese
  • Depressed
  • Looked chronically ill

The plant had massive turnover of staff

That tells me that management is incompetent and needs to be fired. 

If you cannot hold onto your staff then what you are doing is all wrong.  Management needs to look in the mirror. 

31 minutes ago, NickW said:

Don't confuse work ethic with presenteeism.

I never do.  Presenteeism is the death of innovation.  Your company will be at death's door soon enough if you allow that to become the mental set of the personnel. 

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2 hours ago, Jan van Eck said:

All true.  That said, the European system also introduces substantial barriers to employment and its own inefficiencies, which taken as a whole have the perverse effect of creating a stagnant workforce need.  The result, for example, in France is large numbers of entirely employable males, and no jobs.  Those men then end up receiving State payments, essentially a form of perpetual welfare.  That does nobody any good. 

None of which excuses the inexcusable.  Paying your staff so poorly that they have to rely on govt supplements such as Food Stamps is just pathetic.  And that is especially so for a corporation as astoundingly wealthy as WalMart  (which, I might add, was built on the shoulders of very poorly paid workers). 

I'd agree that France is quite an exceptional case. My cousin works for one of the big banks and was saying that the 35 hour working week was putting them off from relocating to Paris. I said - you'll never get the French to work 35 hours.

Take a look at this 

https://tradingeconomics.com/country-list/unemployment-rate

The USA's unemployment is higher than Germany's and the Netherlands. Its comparable to the UK's and Denmark so I'm not certain longer holiday entitlements are automatically acting as a break to generating jobs. Denmark has very high levels of social welfare - and high rates of employment. 

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On 9/4/2019 at 5:55 AM, NickW said:

It always amazed me that that type of holiday appealed in the USA which traditionally has such poor annual leave provisions for workers compared to say Europe. 

 

By the time you have 2 kids, the dog and car old enough to take said trip, everyone has ~4 weeks -->6 weeks of paid vacation a year in USA  Europe tends to start pd vac higher, currently, but aggregates slower if at all.  US stats do not count paid holidays which is ~another week.  Some Euro stats do from what I read many years ago.  I do not know if they have changed.  So, if you read a US article trying to get more vacation days, most do not differentiate between ALL paid vacation days and vacation days employee decides when comparing countries. 

So, the bottom line; actual numbers is that European countries on average, mandate one extra week of discretionary paid vacation. 

PS: Most companies will allow you to package your sick days as vacation.  This in effect, is another week per year for ppl in USA 

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(edited)

Of course oil prices have become more and more unpredictable - when you have Trump using China as his tool to bring the market up & down at HIS DISCRETION and for HIS GAINS ONLY.  By the time Trump leaves office right before 2020 (because he won’t be re-elected) the oil market will be damaged for LONG TERM.  Trump will bring the next recession with all the cheating he’s doing with the market.  Those earnings reports will bring oil stocks down more & more every few months, dividends will shrink or not be paid, and the worst has yet to come.  Watch, wait, see, and that will be all the proof anyone needs to know I wasn’t making ANY of this up.  Hasn’t everyone seen the  “KEEP OUT” sign on the oil market fence?  It was put there by Donald J. Trump himself, who has no intention of EVER having it removed or allowing anyone else to remove it.

Edited by David R. Zernhelt
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On 9/3/2019 at 12:36 PM, Dr.Masih Rezvani said:

Oil prices used to have a predictable seasonal swing. They spiked in the spring, as oil traders anticipated high demand for summer vacation driving. Once demand peaked, prices dropped in the fall and winter.

I have noted that the seasonal swing has gotten smaller and smaller year over year.  Maybe markets have simply learned to compensate to a better degree?  Or more likely, More of the world is using oil and the percentage of the USA/Europe of oil consumption has dwindled along with the USA once again becoming oil ~~~ independent. 

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2 hours ago, David R. Zernhelt said:

you have Trump using China as his tool to bring the market up & down at HIS DISCRETION and for HIS GAINS ONLY.

Have you heard of day traders or swing traders?

 

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