What will oil prices do? They will fluctuate!
Source: Nymex via Wall Street Journal
Fear and Loathing in Crude Pits: David Gaffen: What is learned about the psyche of a market that jumps 8% on a rumor later proved bogus? At the very least, that emotions are frayed.
Crude briefly touched $68 a barrel in electronic trading last night... as of this morning the contract was still up $1.50 to $64.43. The bounce came as a result of rumors of an attack by Iran on U.S. warships -- but the fact that some of the gains have been sustained this morning suggests geopolitics has reasserted itself as the primary worry fueling trading....
Mr. Schork says the follow-through comes, in part, because oil was rising already in the previous days, breaking out of its recent range to move into the mid-60s a barrel. He says the move reflects an increase in buying from speculative types.... But Derek Frey, head trader at Odom & Frey in Atlantic Beach, Fla., says there's at least $2 or $3 in the price of oil now that reflects unrealistic expectations, namely, that the U.S. and Iran could get into a full-blown conflict...
My brother points out that ExxonMobil is unchanged today: the people trading on the NYMEX (volume: $1 billion a day) have changed their expectations, while the people trading ExxonMobil (volume: $1.5 billion a day) have not.
What is ExxonMobil's loading on crude, anyway? How much of its $440 billion capitalization is oil in the ground?