$125 oil

[DannyBly]

Oil prices have approximately doubled since this time last year. The increasing demand and tight supply in China, Brazil and India is playing a part in driving the price of oil higher. Weakness in the US Dollar is also causing investors to buy commodities as a hedge against inflation. Oil has become a safe haven due to weakness in the USD. Oil is priced in dollars, and because the dollar's value has fallen massively, oil is significantly more expensive to Americans.

The geopolitical concerns in countries such as Nigeria and Venezuela further bolster the high price levels. Recent violence in Lebanon between Hezbollah and Lebanon's pro-western government could trigger increased unrest throughout the Middle East.

The price of oil is especially vulnerable to manipulation. Oil is easily prone to supply disruptions - and the complex nature of the global oil system also makes it hard to estimate how much oil is available at a given time.

Although I think the price of oil is out of whack with fundamentals and has been artificially driven up by speculation - I believe the forecasts of $150-$200 oil in the not too distant future may come to pass -

(Goldman Sachs analyst Arjun Murti): Analyst predicts $200 oil could happen this year

 

[trader_dante]

Arjun Murti! Quick, go short!!

 

[grantx]

Danny,

Agree with that. And when (if) oil loses its specualtive appeal OPEC will cut production. It would be interesting to find what the current global needs are, strip out the effects of demand from booming countries - India, China, etc and determine the figure for necessity ex-growth. That's where the OPEC floor will be.

Grant.