Posted on 03/08/2008 3:59:54 AM PST by Man50D
The recent rise in oil prices to over $100 a barrell has been fueled largely by speculators, anaylsts say, hoping to hedge against the falling dollar and an unstable world situation - especially in the Middle East and South America.
But that might change in the next few weeks:
The stunning price rise has been driven almost exclusively by investors who were bailing out of the dollar and other financial assets and pouring into commodities, Judith Dwarkin, chief economist at Calgary-based Ross Smith Energy Group, said yesterday.
“The fundamentals don't support prices at $80, let alone $100,” Ms. Dwarkin said. She said global demand growth has slowed in recent years, while spare capacity among members of the Organization of Petroleum Exporting Countries has expanded somewhat, even as inventories of gasoline are at robust levels.
“The greater prices diverge from what is fundamentally supportable, and the longer they stay at a distance from what is fundamentally supportable, the greater the risk of a correction, and a large one.” She has forecast an average price of $75 a barrel for this year.
Oil consumption in the developed world is dropping more sharply than anticipated just a few months ago because the subprime crisis has contributed to increasing economic weakness, Mr. Lynch said. Even emerging economies have slowed their demand growth in the face of record high prices, he added. This speculative bubble, analysts say, may pop before summer due to increased gasoline stocks and a slowing economy.
At this point, any drop would be a welcome relief.
And demand for that gas is slowing.
Bush and company have thrown the Dollar on the bargain basement shelf by continued lowering of the interest rates.
Printing more money to pass out as party favors, will further devalue the buck.
It is a simple concept that as the Dollar shrivels in value, it will take more to buy anything, even oil.
Here comes spring.....out comes the motorcycle.
Ir can’t possibly go on for much longer. It’s artificial, and it’s getting shakier by the day.
As long as the Fed keeps too many dollar in circulation, and as long as oil is traded in dollars, and as long as the Fed keeps lowering interest rates trying to avoid inflation, fuel prices will remain high. OPEC will see to this because they are paid for their unearned bounty in dollars and as long as dollars aren’t able to buy the goodies the Arabs want in Europe, they will short the supply of oil on the world market to keep the price up so they can buy more “stuff”....
..Going to love watching all these oil speculators losing their shirts.
In the US, demand is dropping.
But in China and India?
I really think a lot of this is artificial ideological nonsense.
Anti americanism and anti bushism trying to crush the US economy for political purposes.
It is as always foolish to fight the invisible hand. Low dollar helps US exports, lowers trade deficits, and reduces imports.
The oil profiteers are trying to stab the US economy and drive the profits of our worst enemies. It does however do a lot of harm to China as well. I think oil will pop.
These attacks on our economy will hurt others worse. That is always what happens in these silly boomerangs
I keep hearing that argument, but remember that gas has gotten more expensive for them too. I know it has not risen to the extent it has here because their currency has not dropped, but it is still more expensive to them. Also, how much stuff do we buy every week that says “made in China”. I know we aren’t their only consumer, but it seems that they are going to slow if we are slowing. Just my .02.
This says it’s basically a political problem and that if we had a real president instead of Jorge, it likely wouldn’t BE a problem...
Who cares about gasoline, what the heck is going on with DIESEL!?!?. I'm paying $3.90 a gallon for something that takes less processing to make than gas! Diesel is now between $.80 and $.90 more than Reg. Unleaded and only a few short years ago it was (and for a long time has been) about $.20 less than Reg. Unleaded?
Really? It isn't because of supply and demand?
I'm shocked, I tell you!
The ag commodities bubble has started to deflate the past two trading days when corn, wheat, soybeans and cotton all went down their limits. Oil will be next. And it’s way past time that happens when the oil companies are cutting down on their imports because of a glut of gasoline and heating oil. Then the speculators bid up the price because there is a “shortfall” in the supply of crude. What a crock. It’s time the speculators feel some pain now.
If You don’y buy from Europe or Japan, there is no real penalty.
Goods imported from countries tied to the $$ and made in USA ar cheap nor affected.
Meanwhile exports and tourism are booming.
Actually, the law of supply and demand is not ignored in this scenario. OPEC is controlling enough of the worldwide supply of crude to keep the prices up.....that is the sole function of OPEC, after all......remember 1973?
er, doesn’t it have more to do with the weak dollar?
We’ll see a pop alright, if OPEC deides to trade crude in euros instead.
My opinion is that some of that price imbalance has to do with biodiesel.
There was an article earlier this morning that Germany was increasing taxes on biodiesel because sales of petroleum diesel were plummeting, and thus they were losing tax revenue. I wonder if something of the sort is going on here, as well?
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