OIL: Gurus told me demand decreases as price increases

Discussion in 'Commodity Futures' started by dividend, Dec 21, 2005.

  1. a la suppy demand curve in econ 101...

    so then why do i see this:

    DJ UPDATE: US Oil Use Record Weekly High At 22.156 M B/D

    NEW YORK (Dow Jones)--U.S. oil demand rose 514,000 barrels a day, or 2.4%, in the week ended Dec. 16 to its highest-ever weekly demand level, at 22.156 million barrels a day, data from the Energy Information Administration show Wednesday.

    It was the second straight week that the EIA, the statistical wing of the Department of Energy, reported record weekly oil demand.

    blame the specs.
  2. moonpi


    I'm sure they also mentioned price elasticity in your eco 101 course.....
  3. Chagi


    Also, you need to remember an important phrase - "all else being equal".
  4. Hasn't the price gone down?

    In September Gasoline was $3.00 plus and oil was near $70.

    The price for distillates has come down and therefore demand has gone up.

    We are probably at the low end of the price range to ensure that supply is able to meet demand.
  5. Think of it this way:

    Price increases in order to reduce the number of buyers.
  6. lol
  7. Dividend,

    Great post.

    I never understand people who "blame the specs" when demand
    goes up every year and new oil discoveries are less than the
    yearly consumption year after year.

    What I find interesting is that demand has increased even in the
    face of gasoline prices spiking up to over $3.00 (albeit temporarily). Even assuming that demand does decrease if gas
    prices go up and stay at $3.00/gallon for a long time, that would mean oil prices in the range of $80.00/Barrel.