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The NewsHour's economics correspondent Paul Solman reports on how the Middle East crisis is affecting the price of oil in other countries.
Bedlam as usual at midtown Manhattan's Man Financial, one of the world's top commodity brokers.
Give me that. I'll give him a shout. I'll get him rolling.
In the Middle East, Hezbollah versus Israel. Hanging on every headline, it seemed, the oil futures market, which, opened for electronic trading Sunday night at 6:00 p.m., would start trading on the exchange floor in less than an hour on Monday. We asked Andy Lebow for recent prices.
ANDREW LEBOW, Man Financial:
Yager (ph), what was last night's range?
It was from $77.74 to $75.60.
That's a $2 difference within minutes, a 3 percent plunge, about 300 points if this were the stock market.
And that was because the Israelis said what right over here at 6:00 in the morning?
That they may very well wrap up the military offensive in a couple of days.
And then that was denied?
Came to here. It's up here now. There's a refinery on fire in Venezuela right now, so the market has rallied up further.
And that chart only went up to 6:00 a.m. What's the price right now?
It's about the same.
The same, unless, of course, the Mideast crisis spreads and drives the price up above last Friday's record $78 bucks a barrel. And that gets us to the key question of this story: What moves the oil market? Lebow's answer: the usual suspects.
It's supply and demand, lack of spare production capacity, lack of spare refinery capacity, geopolitical fears.
In short, a familiar story: the geopolitics of the Middle East; too few refineries; surging demand for oil in China and India; supply problems in Iraq, Nigeria and Venezuela.
But before we take things further, either here or at the actual futures market itself, an even more basic question: What are futures for? Why not just buy and sell oil in the present, like you do mittens or melons? Well, imagine you bought a million barrels of oil at $76 a barrel and the tanker toting it is a week away from port.
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