20 votes

Why is the oil future price negative?

This isn't the "oil price" that's going negative; it's the price of WTI Oil Futures contracts for May. WTI Futures contracts mean taking physical delivery in Cushing, Oklahoma (the hub of the US ...
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  • 301
12 votes
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What is the reasoning behind the sharp fall of oil prices starting in mid 2014?

My understanding of the recent drop in oil price is due to recent changes in US drilling. They are now the worlds largest oil producer. This article by the economist does a good job explaining. My ...
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  • 3,721
9 votes

Why is the oil future price negative?

The oil spot price didn't go negative, this was future contract price. Basically the future contract expires at a certain date and they have to take delivery. The futures owners were dumping because ...
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  • 325
8 votes
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Usage of natural gas in 1970 (where was the demand elasticity?)

tl;dr: it's basic engineering: efficiencies improved between 1970 and 2010. Additionally, net USA imports increased from 0.75 trillion cubic feet in 1970 to 3.8 trillion cubic feet in 2007 I think ...
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  • 7,992
6 votes

Why does any treasury / central bank hold gold?

It's a holdover from the old Gold Standards. Gold standard regulation required all banks, including the central bank to hold gold as a regulatory asset. In the last gold standard, the Bretton Woods ...
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  • 2,690
6 votes

Oil Price Chart Scale

Usually, when people use non-equidistant axis, it is because they want to emphasize some variation more than others. For example, if most of your data is between 0 and 1, but you have one outlier on ...
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  • 10.4k
5 votes
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Annual price of precious metals

You have a few options for data. With questions of this nature, Quandl is your friend. See here for historical gold prices, 1833 until present. I've not read about the methodology here though. This ...
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  • 3,721
5 votes
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What benefits do OPEC countries obtain by cutting oil supply?

The OPEC scenario is quite well described by a market with Cournot Competition. That is, while collusion would lead the highest total profits to the sum of the participants, each invididual ...
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  • 10.4k
5 votes

Why is the oil future price negative?

News say it is because sellers cannot sell it. But, why don't they just hoard it until the coronavirus crisis is off? They can't because their oil storage facilities have a limited capacity. ...
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  • 215
5 votes
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Why didn't other oil pricing benchmarks such as Brent go negative?

The Brent price is for oil physically delivered in the UK. The price that went negative if for oil delivered in West Texas, US. The physical and economic conditions at the two places are different - ...
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4 votes
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Why does any treasury / central bank hold gold?

I guess it is for the same reason that other countries hold foreign reserves. The argument is that for some reason foreign markets become suddenly very adverse to take your currency, you should have ...
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4 votes

Why are CAD, AUD known as commodity currencies

From wikipedia: A commodity currency is a name given to currencies of countries which depend heavily on the export of certain raw materials for income. These countries are typically developing ...
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  • 3,721
4 votes
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How does one interpret the usda wholesale market price reports?

MANGOES: MARKET STEADY. flats 1 layer [[cargo type]] HT [[Haitii]] Francis [[variety]] 9s [[9 fruits in 1 layer flat]] 11.00 [[price for 9 fruits]] 10s [[10 fruits in 1 layer flat]] 12.00 [[price for ...
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  • 71
4 votes
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Why did the inverse correlation of stocks and commodities stopped working in 2008?

The problem in your question is the "and vice versa". To give a very simplistic view, the problem in the 2008 crisis was not on production side - companies had enough to produce, but no-one to sell ...
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  • 1,246
4 votes

Why is Uber worth almost as much as Boeing?

A big part of the answer to this question must surely be network effects. Yes, Ford has a lot of engineering talent. But so has GM. This means that Ford has to compete with GM to sell cars, and this ...
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  • 16.6k
4 votes

What are the most common methods of determining valuation used by economists that claim Bit-Coin is on the verge of being a bubble

There are two ways to look at the value of a financial instrument. One is the underlying asset base, the other is the yield. Bitcoin has no underlying asset base and no yield. Therefore, its only ...
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  • 7,992
4 votes
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What are the most common methods of determining valuation used by economists that claim Bit-Coin is on the verge of being a bubble

I'll draw from John Cochrane's article and working paper, which provide some great points. Bitcoin doesn't provide dividends or an interest rate, there isn't any payment or reward for saving in ...
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4 votes

Labor time and the exchange value (Marx). What about the quality of the raw materials?

The example you've picked is slightly complicated, because I think there are two possible reasons for the difference in price. Both could contribute at the same time, depending on your view of how ...
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  • 1,346
3 votes

Source of commodity production statistics?

I work for Quandl and on our site I can recommend two free historical databases that you may want to check out: The United Nations Industrial Commodities Database, I believe, shows production ...
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  • 181
3 votes

What is the impact of fracking on oil prices?

over the past few months, the oil harvested from fracking had come onto the market reducing the price of gas. Obviously, this makes no sense insofar as the oil harvested from fracking displaces oil ...
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3 votes
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OPEC's market share strategy: What is the benefit of market share in a fungible market?

The benefits of market share in the somewhat-fungible oil market: pricing power (because OPEC is big enough to retain pricing power in the long term because they're a big % of the market. They're ...
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  • 7,992
3 votes

Oil Price Chart Scale

As it has already been explained, it's a logarithmic scale (also called log scale for short). The distance between values doesn't depend on their linear difference, but on their relative difference. ...
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  • 131
3 votes

What is the reasoning behind the sharp fall of oil prices starting in mid 2014?

Considering oil as a commodity that does not expire and can be relatively easily stored, I believe the reason for the recent price drop of oil is much more political than what it has to do with ...
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  • 141
3 votes

What is the reasoning behind the sharp fall of oil prices starting in mid 2014?

The basic factors in the decline of petroleum prices is the increased production in the US in the North Dakota and Texas shale oil fields as a result of the use of hydraulic fracturing in conjunction ...
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3 votes

What is the reasoning behind the sharp fall of oil prices starting in mid 2014?

I'll go ahead and admit that I do not have any empirical evidence, and this is more of factor to consider when evaluating future movement in the oil market. As oil prices drop, some US oil producers ...
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3 votes

Effect of Strengthening US Dollar on Commodities

Most global commodities are quoted (priced) in US dollars. The more valuable a dollar becomes relative to other currencies, all other things equal, the more commodity prices have to fall to ...
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3 votes

Are there any major commodity markets with a public order book?

Major trading exchanges have order books that anyone can see, if they're willing to pay for the service. So in that sense, they are available to the public. For example, anyone can subscribe via a ...
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  • 7,992
3 votes

Labor as a commodity

So in modern English, a commodity is a raw material for production or basic agricultural good that can be exchanged for money. Labor, by this definition, is neither a raw material, no one grinds ...
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  • 6,409
3 votes
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If there was world war 3, which stocks should I short?

Gold is generally the best option for expected political and economic strife as it generally reacts inversely with the markets. Here's a good article on the connection between war and the value of ...
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