Who or what decides the price of OIL…? A single doctor in the USA…!

A couple of months ago I asked if OIL buyers wanted their OIL price to be dictated by Obama or me: 


I was highlighting the option to fix the price and ease OIL buyers away from the market fluctuations that follow any number of worldwide and geopolitical events. Prudence amidst the craziness, particularly given that so many of these fluctuations appear to be linked to conflicting explanations or even truly bizarre reasoning.

Well I ask again who or what dictates the price of OIL on our planet?  What if it were one doctor in the US, would that be just too much and convince you that maybe letting Chris Pomfret dictate your OIL price for the next twelve months might not seem like such a bad idea?

You see it does not matter if Crude OIL is heading up or down very often the reasons are bizarre and almost always remain completely confusing. For example: this morning Brent Crude opened with an early fall and this is why:

TOKYO, Oct 27 (Reuters) – Brent crude futures fell below $86 a barrel on Monday after Goldman Sachs cut its price forecasts for the contract and for U.S. oil in the first quarter of next year by $15. The U.S. investment bank said in a research note on Sunday that it had cut its forecast for West Texas Intermediate to $75 a barrel from $90 and that for Brent to $85 from $100, with rising production in non-OPEC countries outside North America expected to outstrip demand.

So one statement which is very close to complete conjecture changes so many lives with one statement. However, completely opposing conjecture made the opposite impact last week as Reuters continue:

Goldman’s projections contrast sharply with those of Standard Chartered Bank’s oil analyst Paul Horsnell, known for having called the market’s long rally a decade ago, who is sticking with a more bullish bias. Last week, Horsnell and his team pared their forecast for 2015 Brent crude oil by $5 but only to $105 a barrel, still among the highest prediction around after a wave of reductions in bank forecasts over the past few weeks.

I have a really simple question: what would the market have done if both statements had come out at the same time? I have another: why does no one ask these simple questions? I mean seriously why does the market treat such conjecture with such authority? Believe me it is pure conjecture: I have read reports in the last few months predicting $50 a barrel and also $150. Eventually one of them will be right, but whilst we work out who is the craziness of predicting OIL prices continues and it affects billions of lives. 

So what about this doctor? I have stated many times in my blogs that there is zero point in trying to make sense of it. This is a perfect reason why reported on Friday: 

Brent reversed sharp overnight gains and fell towards $86 a barrel on Friday as investors’ risk appetite took a hit from news that a doctor in New York City tested positive for Ebola.

One doctor! It continues:

The first confirmed case in America’s largest city has renewed fears about the spread of the virus, prompting a tumble in U.S. stock futures, while Asian shares also lost ground. “Such news is not good for risk assets, with investors looking for a flight to safety. This could curb travel and that’s how it could feed through to the oil markets,” said Ben Le Brun, market analyst at OptionsXpress in Sydney.

Genius way to ignore the actual facts and create mountains from the proverbial.  I mean Nigeria had Ebola and carefully managed it so that it is now Ebola free. You think any truly developed country is going to have an epidemic? Flu is more likely and as yet I don’t see the worldwide travel industry grinding to a halt because of it! Maybe I am the crazy one?

Which brings me back to my point: OIL buyers should fix their price and they should fix it for many reasons right now – covered in my previous entries. Quite simply I ask who do you want to dictate your OIL price…me or a random doctor in NYC?