Search This Blog

Friday, October 24, 2008

Commodities: Financial market crisis slowing down economies – Oil Prices down (valid as well for all other markets)

© Thomas Ramseyer

When the distribution channel (physical pricedrivers) is crammed with oil, lower consumption expected, no orders for further supply - quotes at the future market become substantially lower.

Emphasizing reason is the financial crisis preventing even still healthy banks from providing liquidity to refinance oil stock.

Options on futures’ prices get under pressure because of delta hedges, thus forcing underlying prices down too. Lower prices cause more and more margin calls.

The speed of the pricecrash is picking up gradually. Market participants trying to escape the disaster helter-skelter force the market even further down. A almost never ending story . . . . . .

Let’s call it bullslide . . .

copyright Thomas Ramseyer