why is the market dropping if oil prices continue to fall?

Question

higher oil prices sure made it fall...now the prices drop, and the market still wont climb?...wtf?

Answer 1

Housing market is slowing down. When the housing market slows down it has a lot of effects on the economy-most of them negative. Fewer people buying houses means fewer durable goods like washers, dryers and refrigerators will be sold. Also as housing prices fall people who already own houses will be unable to tap equity out of their homes, further reducing the amount of money circulating in the economy.

Answer 2

Because the measures taken to lessen demand are long-term.

Auto manufacturers have begun producing high-efficiency hybrid autos which have a service life of 3 to 10 years.

Alternative fuels are coming online, so oil producers must ramp their prices down to compete with less expensive alternative fuels. If they can do it fast enough, those considering financing alternative fuel production will reconsider and walk away from those seeking venture capital.

Existing refinery capacity in America is being increased and more refineries are being approved for construction. America has alot more oil under the ground than it is believed, especially in Alaska. If the price of oil were to remain high, or continue to rise, more wells would be drilled. If you don't believe there's alot of oil in America, answer me this question: Do rocks burn? Of course not, is your answer. So what was all that smoke that came out of Mt. St. Helens? Yup, oil burning.

The hemp ban is being lifted in various areas (hemp produces more methanol per acre than any other bio source) so it was necessary for oil producers to lower the price before more hemp ban lifts are considered.

The oil producers are always testing the envelope to see how far they can leverage their monopoly on automobile fuel. Every time they do the same gophers pop out of their holes. Lowering prices is one way they can beat them back down.

Then the legislation games begin anew to consolidate their monopoly while oil prices are low and we're not looking.

Answer 3

Off hand I would say "too much" or too many. Lets see, cars, RVs, durable goods, homes, oil, gas etc. Consumer confidence is not good, people are not spending on goods we produce or import. The fed has not seen it fit to do anything with the interest rates and housing is down big time. Auto makers have overproduced and now face excess inventories with a model change coming. Oil has a big impact i agree but there are other cards on the table, one ace won't make a winning hand.

The views expressed are my own, if you don't agree, sorry about that.

Answer 4

I can't entirely answer your question.
But since oil prices began to climb, In Australia ( in my town) we have been paying $1.50 a litre, Oil prices have dropped dramatically over the last few months and we are still paying $1.45.?
We have heard the reason is everything from the war in iraq, to the price of bannanas rising ( when we had a small hurricane on the coast )
To inflation prices rising.
It's crazy.

Answer 5

It is always a bad idea to expect the market to react rationally to anything in the real world.

I think it reacts emotionally to the uncertainty about Iraq, Iran, Israel and Lebanon, Afghanistan, unrest in China and India, the coup in Thailand, as well as domestic issues like the failure of Ford & GM, the potential change in policies if the Dems reverve the Reps majority, President Bush's policies in general, and lots of other concerns.

I don't think we can expect to see any serious gains until the spring.

Answer 6

There were news about progress in talk with Iran in past weeks. Lot of oils were stocked up although demand was high during summer and pipe line repair in Alaska wasn't bad as once thought. These things really do effect what commodity traders do.

Answer 7

Too Much G W Bush-o-mania

Answer 8

It is because of the e-coli scare with spinach.