Monday, November 08, 2004

Oil prices are falling, briefly dipping below $49/barrel today. Why? We can't foget the contributions of our friends the speculators who have moved on to bigger and better things.
Oil prices fell further from record highs on Monday as easing concern about winter supplies prompted big-money hedge funds to switch money away from oil and into other financial markets. . . .

As confidence grows over supplies for the northern winter, speculative hedge funds cut their long positions in New York crude oil futures to the lowest levels in a year, the U.S. Commodity Futures Trading Commission said on Friday.
Funny how oil prices are falling rapidly just as US stock market prices are shooting upwards. On October 25 the S&P 500 bottomed out at 1094.80; since then the market is up 6%. By sheer coincidence, October 26 was the peak of oil prices, which topped out at $55.17/barrel on the NYMEX; since then oil has dropped 10%. It's all about newfound optimism based on falling oil prices, huh? Could Wall Street's rally over the past two weeks be fueled primarily by the speculators shifting from oil to stocks?? O, perish the thought!

With China cooling and the OECD predicting sluggish growth for 2005, one also has to begin asking when and how the Saudis will begin resurrecting OPEC. Just two weeks ago, OPEC president Purnomo Yusgiantoro was urging Bush to tap the Strategic Petroleum Reserve. Now they have got to be thinking about getting all their little ducks -- Iran, Venezuela, Libya, etc. -- back in a row. After six months or more of throwing caution (and quotas) to the wind, will the Saudis now reap nothing but the whirlwind?

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