So there is the earthquake in Japan. Japan is huge importer of oil. Huge importer of everything in fact. And the nuclear thing seemed not so so bad, but since yesterday it's been looking pretty bad. This much you know already
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So riddle me this. Why did oil fall today? Makes absolutely no sense.
Because the price is not dependent on just Japan. There's other things going on in the world too. For example, it looks like Gaddhafiblahblah might win his civil war and restore "stability" there, that affects the price. And the price was already inflated so it's reasonable for it to come back down a bit.
When Qaddaffi went bonkers on the protesters, 2% of the world's supply was at stake and oil flew. We saw time and time again that instability in the middle east raises the price of oil.
Because the Middle East is a region that collectively provides imports (though more Middle Eastern Oil goes to the Far East and Europe, the USA actually imports more oil from Canada and Mexico than from much of the Middle East) to a great part of the world, and fear of a domino effect can be much more powerful than sheer, mundane reality.
Because the price is not dependent on just Japan. There's other things going on in the world too. For example, it looks like Gaddhafiblahblah might win his civil war and restore "stability" there, that affects the price. And the price was already inflated so it's reasonable for it to come back down a bit.
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Besides, the markets seem to over-react to uncertainty, it's not like we're seeing instability in Japan... outside of nuclear plants anyhow.
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