Veteran investor George Soros, in an interview with the Telegraph, describes speculation as a significant factor in the recent spike in oil prices. However, he doesn’t expect prices to break until there are signs of economic weakening. Later in the post, I’ll provide some information that suggests how traditional supply/demand forces could have been swamped […]
Read more...Here I wanted a light weekend and what does Jim Hamilton do but go and put up a link to a very interesting new paper of his. This is from the introduction: How would one go about explaining what oil prices have been doing and predicting where they might be headed next? This paper explores […]
Read more...Steve Waldman, in a colorful post, “A run on central banks?” contends that the rapid rise of commodities prices isn’t the result of mundane factors like negative real interest rates, but a more fundamental cause: loss of faith in the monetary authorities: Just as the fear of a bank’s insolvency can precipitate a run that […]
Read more...You gotta love how the reporting follows the tape. While oil prices were shooting up, the Goldman forecast and supporting views were getting the prime real estate in news coverage. Now with a reversion, the contrary and cautionary views are getting airtime. From Bloomberg: Crude oil fell more than $2 a barrel on signs that […]
Read more...Not only do recent trading patterns suggest short covering played a role in the recent oil price spike, but declining open interest also says new money is holding off entering after such a fast runup. From Bloomberg: Oil’s rally to a record above $135 a barrel came as traders bought crude to cover wrong-way bets […]
Read more...The headline above is perhaps the most important message contained in the front page Wall Street Journal article, “Energy Watchdog Warns Of Oil-Production Crunch.” Well, in fairness, it may rank as important as the thrust of the article, which is that the IEA, which recently had predicted that oil supplies would be able to more […]
Read more...Let me make a wee confession: I tend not to follow money supply figures closely, in part because I am not a fund manager (there are only so many things you can watch on the side) and in part because we are missing some key underpinnings that might help make it a useful metric. In […]
Read more...I’m just a wee observer of skeptical temperament. A move of this magnitude based on one analyst’s reading seems a bit disproportionate. Even Abby Joseph Cohen and Mary Meeker didn’t have this sort of sway in their heyday. However, contracts that far out are thinly traded, so it doesn’t take much of a change in […]
Read more...The interpretations of the implications of the Riyadh-Washington pas de deux over oil production increases were surprisingly disparate, a seeming Rorschach test of sentiment about the US, Bush, and the Middle East. The papers that see themselves as US opinion leaders, namely the New York Times and the Wall Street Journal, stressed how little the […]
Read more...There are some interesting cross currents in the day’s offerings on oil. What a difference a year makes. Not so long ago, the peak oil crowd was seen in much the same light as the discredited Club of Rome: worrywarts about a bad future that would probably take a long time to arrive. Now everyone […]
Read more...First we had the arguments over global warming. China asserts that it has the right to produce as much carbon per person as we do. In theory that’s fine, in practice that means a rather unpleasant planet in a hundred years or less. But those who created the mess won’t be around to suffer the […]
Read more...The great imperial struggles of the 1800s were over control of strategic or otherwise prized resources, and the hostilities they generated helped stoke World Wars I and II. Many believe the Iraq war was all about oil. China is considering adopting a contemporary variant of the colonial model. A Ministry of Agriculture proposal suggests that […]
Read more...A Wall Street Journal survey of 53 economists found the great majority said that the spike in food and energy prices is the result of supply and demand, not speculation. At the same time, the average forecast among this group is that oil will be at $93 a barrel by year end. While the article […]
Read more...India has halted futures trading in certain types of commodities in an effort to combat inflation by reducing speculation. Observers argue this is likely to be ineffective, arguing that the price rise is fundamentally driven. It is true that just about every major economy ex the US and Japan is suffering from inflation (and most […]
Read more...Goldman foresees a continue rise in oil prices due to continuing capacity constraints and continued strong demand from emerging economies. From Bloomberg: Crude oil prices may rise to between $150 and $200 a barrel within two years because of a lack of adequate supply growth, Goldman Sachs Group Inc. analysts led by Arjun N. Murti […]
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