When you buy an oil stock, does the oil company buy oil commodities with your money, driving up the price?

I can picture this in my little mind. lol I mean if I follow the money trail possibilities, what is to stop this? Are we feeding a frenzy that we are not aware of buying oil stocks? lol





If you build a shed up on blocks to put your stuff in, would you be surprised if a family of squirrels built a nest under it to store their nuts?When you buy an oil stock, does the oil company buy oil commodities with your money, driving up the price?
Well, I think you are close to the guess I've got in my head, but I suspect it is more like some folks in OPEC bidding up oil futures to prod their product's price into the stratisphere.





The only time oil companies would use futures (commodities) is to round out the delivery of product beyond their normal production in order to fit specific projected needs. This is the same thing as our government does by floating short term debt in order to balance out the gaps in receipts for ongoing operations. If a refiner or gas station chain uses the Planalyst program that I was once promoting to retailers a few years ago, and they spotted a seasonal trend in demand that was above what the company usually would produce, then they need to acquire more product for that future need. So then they use the commodities markets. Another is to hedge their delivery, say some country where they have production has some instability (government wants to confiscate the facilities, anti-government rebels need some negotiating chip to spur more talks, etc.) then the oil company may want to keep some contracts floated to supply or deliver what they might not be otherwise get if the news from that country goes bad.





I recognize as OPEC has recently said, the value of the dollar has dropped so the price of oil has risen. Others, however, suggest that the price should be more like 60 to 80 bucks a barrel if that were true. Someone else recently pointed out that the oil futures are several times the volume that they used to be, so there is some expensive speculating driving up prices -- the rat that you are smelling.





All of that aside, when I buy shares in, say, ConocoPhillips or Exxon, that money (less commissions, of course) goes to whomever sold those shares of ConocoPhillips or Exxon. The oil companies are not actively trading their own stock in order to get money to dabble in futures. When they did their Initial Public Offering, that was when the oil companies got money from people buying their stock. After those shares are outstanding, then it is just a trader/investor selling to another trader/investor. Buying oil company stocks are not fueling crude oil futures prices, sorry.When you buy an oil stock, does the oil company buy oil commodities with your money, driving up the price?
When you buy stock, other than in a Initial Public Offering, the company never gets your money.





Buying into oil stocks has absolutely nothing to do, directly or indirectly, with the price of oil.





Don't understand your shed story, nor the squirrels, how is this related to stock transactions, or to the price of oil.





You have no idea about investing or how stock works, yet you're eager to express Liberal ideas about downing oil companies,
Hi,





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Wow...... you are truly wrong. What is stock trading? It's buying shares from sellers (the Public, Mutual Funds, Hedge Funds, Retirement Plans, etc.)................................





Best bet: pick up some books on investing in stocks, basic economics and read some business magazines. It will help in furthering your understanding.
Unless you are buying stocks during an IPO, the money doesn't go to the company, it goes to the person you are buying the stock from.
what is to stop this?? Gee, golly, maybe the SEC - Securities %26amp; Exchange Commission.
No.