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Non-Tech : General Electric (GE)
GE 290.45-2.7%1:04 PM EST
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To: CIMA who wrote (1423)9/12/2000 6:00:37 AM
From: Arthur Tang  Read Replies (1) of 3256
 
Thank you for the Mexican views on oil. It is not off topic for GE, since oil price is part of inflation. Inflation effects all business.

The problem with oil futures is that oil futures is quite small compare to grains; meaning the number of contracts. So, manipulation is quite easy. The OPEC action may be analyzed as insufficient to change the futures contract price. But the way the futures exchange works, is that they have to balance the long and short contracts. So, the excess shorts had to be balanced by bidding the price up at first to scalp the shorts(OPEC presented a sure bet). Then, the normal winter oil price will prevail, when the pit traders scalp the longs. Winter driving will be less; heating oil usage(small compare to gasoline usage) will be tempered by a mild winter. OPEC traditionally laments on winter oil price.

The new gasoline formula change, spells less of a demand on crude oil. Some formula calls for no crude oil at all. New heating oil formula may also contain at least 30% water. No one will stock the heating oil formula until delivery. So, the higher price of crude but less usage balanced out the economy around the world. Otherwise, all oil export dependent countries will all go into bankruptcy.
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