Oil drops below $70 a barrel
Signs that an enfeebled U.S. economy is using less and less oil sent world crude prices below $70 a barrel for the first time in 14 months, a dramatic turnaround for a market that not long ago had some analysts predicting $200-a-barrel oil as early as next year.When a befuddled and furious Hugo Chavez demanded of his own budget planners an explanation as to why he could no longer afford to buy Russian bombers, that group is reported to have chorused "Nobody expects the Spanish Inquisition!" I hope so, anyway.
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1 comment:
This is all so 1999 (or was it 2000?).
While everyone talks about fundamentals and demand shifts, does anyone notice the outflows in commodity investments from all the hot money momentum types who bought oil because it was going up consistently?
Just like Greenwich real estate or dot com stocks, when there is no one left to buy, prices start coming down. Unlike real estate, which has a floor somewhere because of all the reasons examined in this blog, oil can overcorrect on the way down as all the hot money 'investors' close out their positions, investors who need cash sell what they can rather than what they would like to, etc.
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