The trials and tribulations of oil...
Like most, I only know the basics about oil:
- it lets me drive around (or at least it would if I had a license)
- you should never mix it with sea life (otherwise you're going to have a lawsuit on your hands faster than you can say Ryan Giggs superinjunction)
- once it's refined it can be used to make products such as: lubricants, asphalt and the raw materials for plastics and rubber
Well, I possibly didn't know the last one (I'm not even quite sure what asphalt is), but a quick Google search is the equivalent to knowing it off the top of your head.
However, what I didn't know was quite how volatile (market-wise) it was. If you read the news covering commodities (FT, Companies & Markets covers it most days towards the back pages), you'll soon see it has more ups and downs in stock price and drama surrounding it, than Jordan does on 'What Katie did next' (yes, I am a bad person).
In August, not only did we hear how the European Union was preparing to impose an oil embargo on Syria; but saw Petrofac (an oil and gas services company with a revenue of $4,354.2 million) potentially expanding its business into Libya in light of the revolution in Tripoli.
Then this month, in response to the Fed's 'Operation Twist' we've seen traders shunning oil in favour of less volatile assets: "Since the Fed concluded its meeting, gold alone has tumbled 8 per cent to $1,656 an ounce, while US oil prices dropped from $86 to below $80 a barrel, their lowest level in more than a year." (Michael Mackenzie and Dan McCrum, Financial Times).
Not to mention the Commodity Futures Trading Commission saga in August, whereby: "The [newly proposed] rules would prevent speculators from amassing futures contracts totalling more than 25 per cent of the deliverable supply of a commodity" (Gregory Myer, Financial Times).
Basically, when the Eastenders omnibus is cancelled for the Olympics/next Royal wedding, and you're not a sports fan/royalist, crack out a couple of articles on oil and you'll soon be thinking: "Oh no they did not just say that?!", "Babes that is totes out of order", or something along those lines...