Higher interest rates so far haven't done it. I think only a recession can kill it. Even then maybe not, these markets have defied fundementals so far. Can't the central banks world wide create a plunge inducement team in those markets like the one they had going in gold for 20 years? Just a hint of the that and the bulls may panic.
Oil is simply a cornered market, with a broken price discovery mechanism. No need for intervention, just initiating contracts for oil types which represent a broader % of physical production would suffice. For some people, gold is an alternative to fiat currencies, so its future depends on the inflationary policies of the world's central banks.
yup, recession would do it. For crude anyway. Gold changes its mind all the time with regards to what makes it move. Inflation?, $ hedge?, disaster hedge? Skitso.
I say a giant asteroid made of oil, size of Rhode Island hitting Earth would have the effect of a stark drop in oilprices, but I am no expert... Seriously, a virus, a recession, a sudden discovery of a huge oilfield all could cause a drop in price...
I just recently had this discussion. I dont think that these items are all supply/demand (i know..pretty obvious right?). I think the thing that will kill these is plain and simple people get tired of them. tired of hearing about it, trading it...whatever. the "new car smell" wears off. you will see this happen thorughout time in the markets...they are just cyclical. this is not the first time people have been predicting oil and gold to go to the moon... despite the fact that we dont have any more of it and we will run out (in the case of oil) i think things like OIH will peeter off little by little for this cyclical period. look at the head and shoulders pattern in OIH for instance..this despite the parabolic movement in crude...why? well....it is kind of going with the rest of the indices, and following the standard bear.bull market hoopla. not very scientific, i know...but i will stand by it.
what about increasing margin requirements to reduce speculation on oil ? How about 3:1 instead of 40:1 ?? Is it a practical suggestion?
Number of longs = number of shorts. Increasing margin requirement will only decrease liquidity, which could cause oil to spike even higher. If the dumb money are the one who is shorting oil - i call them dumb because they are losing money all along, and IMO the dumb are usually the less capitalized mom & pop traders, increasing margin requirement will only keep these shorts away from the market. So, what's the arguement for increasing margin requirement?
The real players (the guys who use the oil, and the guys who sell it) don't need in and out on their purchasing decisions. The gamblers do. The liquidity benefits the gamblers more than it does the big money. If you have 1000 barrels you want to sell, you sell it once. You don't sell, buy low to cover, sell high again, etc. etc. This liquidity from the gamblers is a gift to the powers that be. Search for COT reports on oil. hedge funds and mom and pop are longs, while the oil majors / banks /etc are the shorts. So my argument is that taking gamblers who thrive on leverage (dumb money and hedge funds) would take the longs out of the market, and help restore the price down.