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Shrinking Crude Oil Prices

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  • Description

    FBN’s Sandra Smith argues severe weakness in the euro and a strong dollar are affecting oil prices.

  • Duration 4:43
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-- -- -- Well joining me now is that Fox Business network's Sandra Smith and -- -- last time you were on we talked about the speculators and nobody's yelling about the now the prices are coming down.

What are those -- what why why -- the speculators only vilified when the prices go one.

That's right in adding I love listening to mr.

pop Meister and I think he makes -- strongest point that you can possibly make about the speculators.

Net speculators survey very essential purpose in the marketplace when you hear politicians.

Speaking out about speculation -- gleaming high oil and gas price on speculation.

It is a cop out as he said.

It's a cop out for the fact that this administration right now has not employed -- successful energy policy and were not.

Working towards independence from foreign oil I think it's a major problem right now.

Which way do you see -- because there are those two parts I explained via a discussed and what John was.

On one hand he's saying yes the oil traders are are routine at.

The overall economic and global economic growth that.

All they're looking but what about that point about at some point when prices get high people start cutting back and we started seeing demand dropped.

I was which would pot from a very young age from a family of traders and nothing teachers higher prices.

-- higher price exactly and that happens with anything in life prices get to a point.

Where there -- so much concern about geopolitical risk there is concern about China's rapid growth the US was recovering from a recession.

And these -- speculator was buying oil based on those.

But those fundamentals that they were looking into the future while also has mr.

copyrights -- -- -- we not have a -- word.

Economic forecast not just in the United States but all over the globe specifically in China we're talking about a bubble in China.

And now -- starting to see those prices come down this is the natural function of the market timing at the pleasure to see it working.

Yeah it is it it gives a little more volatility in back in the days when things work.

Controlled by OPEC but don't expect doesn't have control any more at all.

Now -- and I I think we're probably gonna continue to see you oil prices you know there are gonna remain volatile as we try to figure out what's happening here.

Does a lot that's happening in those markets we are entering into the summer driving season the refiners are gonna have to ramp up production to meet those demands.

We have enough oil in the United States right now its refining capacity that we're lacking.

And added you know as of this past week we're looking at the reversal of the Seaway pipeline we're trying to get.

There's a lot of oil supplies it's sitting in Cushing Oklahoma and get -- to these refineries down on the Texas Gulf Coast.

So we can start to produce more gasoline in this country -- it is a major problem.

All right to right now we've gone from so far this year we've gone from the oil traders saying.

The economy around the world is going to have more demand.

To now they're saying I'm not so sure about the economy around the world looks like the the single which they blowing down things change so now -- summer driving season what's gonna happen this summer.

Well you know right now we're looking at very very you know bearish economic.

Geo political forecast for the globe and that's why -- oil prices come down.

Looking into the future nobody obviously has a crystal ball for that one.

But what I am hearing and I spend allot each time on the trading floor specifically the commodity trading port floors in Chicago.

Is it is looking at the US dollar -- severe weakness in the Euro.

We have traders and speculators that are unwilling to take on risk in this environment a lot of money's going out of commodities and into the US dollar right now out of the Euro currency.

The more money that you see going into the US dollar.

The farther down commodity prices are -- to fall looking gold for example.

All those over 19100 dollars announced last October yeah it's now trading at 15100 -- give us the dollar isn't declining because of anything that Washington is doing the dollar had been declining it is being -- I'm sorry right dollar is is not growing director thanks would write the dollar is not growing because relating Washington's doing is simply a matter of of the problems in Europe more than anything else.

It cracked the risk off trade.

Meaning people are seeing what's happening over in Europe speculators are seen what's happening over in Europe in China they're concerned about the global economic environment the concern about the recovery here at home.

-- take their money out of those riskier investments like oil like gold wasting money coming out of the equities markets.

And they're traded in for dollars they're saying I'm gonna take my cash -- -- -- well.

-- oil sold -- dollar based commodities they're for exactly what the more the dollar gets stronger the lower the oil prices -- they all are all those commodities even the food commodities on the energy and I know the Obama White House is happy when they see those oil prices coming down -- -- downward to -- to get reelected with high oil profit they're probably just disappointed that they can't -- their -- -- -- the speculators anymore -- figure -- awaited.

Zander Smith thank -- so they --

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