Quote:
Originally Posted by LightsChromeHorsepower
The thing about current oil prices is that they totally unsupported by any fundamentals. Stocks and reserves are growing and demand is, or should be, falling as the economy weakens. My personal opinion is that at least $30.00 of the current oil price is due to speculation. The root cause of which is that we have a global crisis of excess liquidity. A bunch of the money that was buying mortgage backed securities is now chasing oil futures. I predict that the price of oil will drop dramatically at some point, I'm just not sure when, or how much damage will be done to the economy before it does.
My favorite conspiriacy theory is that our current regime knows that it will be out of power next year, and is doing everything it can to destroy the nations economy, so the new regime will have a huge mess to deal with at home as well as in Iraq and Afghanistan.
I'd say if that's there goal, they are doing a great job.
Something to go along with your suppositions;
http://news.yahoo.com/s/ap/20080311/..._ge/oil_prices
Quote:
Oil prices above $107 a barrel in Asia
By GILLIAN WONG, Associated Press Writer
Tue Mar 11, 2:13 AM ET
SINGAPORE - Oil prices were steady above $107 a barrel after rising to a record in the previous session as the U.S. dollar weakened further.
Speculation that rising prices for oil and other commodities will offset the falling dollar has driven oil's rally from $87 a barrel in January.
The dollar has fallen to three-year lows against the yen and the head of the European Central Bank expressed concern Monday about the "disorderly movements" of exchange rates.
"This surge to new records is driven by the speculative and large funds moving money into commodities. It's primarily a U.S. dollar and inflation play by financial investors," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Light, sweet crude for April delivery dropped 21 cents to $107.69 a barrel in Asian electronic trading on the New York Mercantile Exchange, by midday in Singapore.
Crude futures on Monday rose $2.75 to settle at a record $107.90 a barrel after setting an all-time trading high of $108.21 earlier in the session.
Many analysts believe speculative investing attracted by the weak dollar is the primary reason oil has risen so far so fast in recent months. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.
There was little in oil's price uncertainty to convince analysts that the huge runup in oil prices has run its course. Analysts have said expectations are growing that the U.S. Federal Reserve would cut interest rates at its policy planners' next meeting March 18.
"Lower interest rates would mean increasing liquidity, which means a further weakening of the U.S. dollar and rising U.S. inflation," Shum said. "What that means for investors is that they therefore move their money into commodities as a hedge against inflation."
While the dollar fluctuated against the euro on Monday, many investors believe the greenback is likely to keep falling as the Fed continues to cut rates. Many analysts believe the rise in crude prices is not supported by the market's underlying fundamentals, noting that supplies are generally rising while demand is falling.
"Crude oil futures' relentless advance is a price bubble and certainly, a sharp pullback cannot be ruled out," Shum said.
"What may at some point trigger investors to exit oil is perhaps a build up of poor economic data out of the U.S.," he added. "That may be enough of a trigger to refocus attentions on the U.S. and slow oil demand growth there."
Other energy futures were mixed Tuesday. April heating oil futures rose 0.16 cent to $2.975 a gallon while April gasoline futures lost 0.5 cent to settle at $2.7099 a gallon.
April natural gas futures fell 2.3 cents to $10.001 per 1,000 cubic feet after settling at $10.024 on Monday, the first time a natural gas contract has closed above $10 since January 2006.
Natural gas was following oil higher, but also rising in anticipation of cooler temperatures across the U.S. Midwest and Northeast, analysts said.
In London, Brent crude futures were flat at $104.16 a barrel on the ICE Futures exchange.
The U.S. Energy Information Administration releases its short-term energy outlook later Tuesday and weekly oil and product inventory data on Wednesday. These indicators, along with the Commerce Department's retail sales data release on Thursday, are traditionally used as cues for oil prices, though their impact has been muted lately.
A Dow Jones Newswires survey of analysts found an average forecast of a 1.7 million barrel increase in oil inventories for the week ending March 7, a 100,000 barrel increase in gasoline stocks and a 2 million barrel draw in distillate inventories. Last week saw a surprise draw in oil inventories, after seven-straight weeks of gains.
Just something to wrap the mind around and contemplate. :cry: :cry: