Why does the oil price drop after the hurricane?

It's nice that the oil prices are dropping, but I was just wondering why? Is not the hurricane supposed to increase the oir prices?Why does the oil price drop after the hurricane?
The oil prices started going up in anticipation of the hurricane actually hitting the oil production.





But it passed away without impacting oil production and therefore the price of oil dropped. Why does the oil price drop after the hurricane?
Because speculation drives oil prices.


Increased purchasing due to low dollar value is what drove the price up in the first place.


Perception of a possible interruption in supply is caused when a hurricane pops up on the radar. This causes speculators to purchase oil futures looking for a large cash-in if the hurricane disrupts supply. When it doesn't they scramble to sell off their futures before they drop. This selling itself, causes prices to drop.





anyone who thinks supply and demand is driving oil prices is about as misinformed as it gets. I guess maybe it is a supply of future contracts vs demand of future contracts but in reality it is mostly speculation that determines the price of oil.


If the Gustac wouldn't have popped up on the radar in the first place, the prices wouldn't have jumped to begin with, unless some other news influenced speculators to buy more oil.
The gulf is full of oil rigs, and onshore, particularly around Lake Charles in LA, there are most of the country's refinaries. In fact 14 were shut down during the storm.





After the storm proved to be more benign than feared, the price of oil dropped. Actually world wide the prices of all commodities have been dropping because of reduced demand as the worlds' economies soften. So the spike up prior to Gustav was simply a counter bear market rise.





I don't recommend getting into commodities now. Wait till world demand starts to rise again. DEMAND is your key word. It was demand which took the price of oil up, and it is REDUCED DEMAND which is leading the price down.
To dnldslk: Demand will not rise for oil even if it gets cheaper because simply put, there are NOW other ways to get energy sources and run our cars like solar pannels, wind energy, nuclear, natural gas, ethanol, biodiesel, hybrid cars, plug in hybrids, etc.





And even if oil gets again to $50 a barrel, people will still won't go back to gasoline because there is the other problem with oil that is global warming.
Because the storm has not impacted demand for oil by destroying production/refining facilities. Therefore supply ';increases';, and the price drops.
The price went up to allow for a shortage caused by hurricane damage to drilling facilities and refineries along the gulf coast. This damage didn't happen, so there will be no shortage.
It would if it had disrupted gulf production. It didn't.