If the global economic engine was so weak I think oil would be trading much much lower. Perhaps decoupling is real; that the BRIC economies can stand on their own now. If this is true than we should see a faster outflow of money from the US. This outflow would mean higher interest rate, lower asset prices like homes, and higher unemployment, but also higher wages for those employed; etc. among other things. I think this cycle will increase the wealth gap as well. I think when the FED steps off the accelerator after Bernanke steps down in 2010 the interest rate will shoot up.
I would contend that the price also reflects the weakness and overall decreased buying power of the USD. petrodollars even at 70 maybe worth the same as 50 petrodollars were worth only 2-3 years ago. (Which technically agrees with your outflow of money conjecture - short USD, long BRIC) my 2 petrocents 11Blade.
That prediction is too high. Go lower than that say $25-$35 a barrel. Demand isn't there, its completely manipulated to the upside at this point, the higher equities move the higher oil goes, oil at $100 cannot sustain itself in this weakening economy.
I agree with this. There is a supply glut of historic proportions. Eventually the CL specs wont be able to ignore the facts on the ground. 70 to 30 is a 40,000 move per contract. It could easily happen this year.
During a crisis, various financial assets tend to correlate more strongly (more likely than not to the SP500). In this case look at AG stocks such as POT. They are almost in sync with CL. Another reason for this is that most of the AG hedge funds / mutual funds are buying up anything related to commodities all at once. But as has been mentioned before this has nothing to do with fundamentals what-so-ever! It's all supply and demand on liquidity steroids.
Too much money chasing fewer "safe" investment opportunities with the added component of a degraded USD If the CFTC eliminated exemptions on speculative limits for the 2 largest speculators ( read GS and MS), price would drop like a rock. If large specs. were mandated to take delivery without rolling contracts forward, prices would drop like a rock. If the oil-usd peg was eliminated, prices would drop like a rock Here's a hint. Watch tanker rates to figure out when there will be a sustainable sell-off. Since you can't eat that shit and there is no economy sound enough to use all the current production, the oil is being stored in tankers off shore. Once Tanker rates reach un-sustainable levels, watch for an ensuing sell-off.
Since more than 50% of crude oil is being imported on a daily basis could they (the oil exporting entities) just peg the price of oil to the equity market of the #1 oil importer (the United States)? On the other hand, natural gas crashed down to multi year lows but the winter seasons should increase demand for nat gas while the summer driving season is over for crude oil.