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I have not followed this oil mess as of late. I wanted to get you guys take on it. You think prices will drop some what in the future? From what I have caught off of news bits here and there is that a lot of it is speculation. With peak oil, prices have been predicted to rise moving forward.
One Moody's analyst (but by now an organization whose credibility is badly impaired) broke down the components of the high oil price. I don't remember the exact breakdown, but demand from emerging markets (India, China) accounts for something like 25% and speculation another 25%.
Without inside knowledge and a crystal ball, it is extremely hard to predict how these factors will play in with the US recession. Some analysts believe that this time around, the US recession will not lead to a drop in oil and other commodity prices (can you say 'stagflation'?).
Lehman Brothers just did a study on non-exchange traded metals, concluding that real demand, and not investors and market speculation, has driven rises in prices.
I have not followed this oil mess as of late. I wanted to get you guys take on it. You think prices will drop some what in the future? From what I have caught off of news bits here and there is that a lot of it is speculation. With peak oil, prices have been predicted to rise moving forward.
I found it funny that the WSJ quoted the Saudis as claiming that they were on track to produce 11.8 million bpd this year and 12.5 million bpd next year. The same article stated that the EIA estimates that the Saudis were only producing 9.2 million bpd so far this year. It appears to me that Saudi oil fields are starting to fail and all they can do now is try to jawbone the markets.
I pretty much agree with you on this one. What does "jawbone the markets" mean though?
"Jawbone the markets" would be like making press statements about oil production that are not in line with what the Saudis are actually producing. The intent would be to influence the oil market prices in one direction or another by words, not actual performance.
price pressure is just a part of the market, so that's always gonna be a factor. Speculation can only go so far. What has helped it so much right now is the turbulence in various oil producing countries. When the speculators try and sell the "dangerously low supply" line with the news blasting about the Iraq war and the high price of oil scrolling about, it's easy.
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