The Reasons Why Oil Prices Escalate

Thursday, 25. September 2008

Well just as we started to rejoice in the steady fall in oil prices and the price war that started last week between the oil companies and the supermarket chains we suddenly saw a massive increase in the price of crude oil of $25 a barrel on Monday. Now whilst there was an element of manipulation on the markets protecting traders on the futures market from over exposure it has still sent jitters throughout the car industry and concerned drivers (who heard about the rise). Strangely, this massive increase in the cost of oil received very little coverage compared to the Labour conference and in particular the Gordon Brown speech so not such a bad thing I guess. This is only expected to be a glitch as, according to a Financial Times report, traders were trying to get out of a ‘short position’. I’d explain what this meant but firstly I shouldn’t imagine you are remotely interested and secondly I haven’t a clue what it means other than if the traders hadn’t acted they may have ended up having to take delivery of oil that they’ve purchased and that is certainly not part of the equation. I can’t wait for the time when traders introduce futures trading on eBay, now there’s a thought! Nothing gets sold but traders make a fortune. The good news is that prices at my local petrol stations have fallen again – excellent! Graham Hill