The oil futures market (NYMEX) is an auction. Just like the New York Stock Exchange or the NASDAQ, or Chicago Board of Trade. They are all auctions, and people bid to purchase oil, or stocks or cotton, or soybeans, anything at all. If there are no bids, the price goes down, if there are a lot of bids, price goes up. Quite simple to explain, very complicated to actually complete, as there are millions of sales everyday, and it is all computerized.Why do oil prices keep going down?? (the barrel of oil) who is in charge of making the prices?
Oil trades on commodity exchanges around the world. Its not quite like the New York Stock Exchange or the NASDAQ, where traders have ownership in the stocks they buy,, because traders, indeed most, in oil never intend to take delivery of the oil. They trade futures contracts on oil. An intention to take delivery in the future. And those contracts may be reversed and not fulfilled. But this does drive up the price because they are trading the contacts on the anticipation of future supply and demand. Whats happening now is the demand they anticipated hasnt materialized because of the slow economy and now there is an over supply and the price is dropping.
The bid maker and the offer maker. It is based on the direction of the inflation and deflation forces in the world economy. I am sure that there are those who will want to say that the election of November 4, 2008 started the free fall in oil prices. So ahead it is your country and the media will take up your argument.
Oil is going lower because of the recession and lower demand in China and the USA.
According to the Democrats, Bush.
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