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Throwing Oil Overboard - The Case for $90 Oil
$90 Oil? Are you serious?
Yes I am. In fact, I jumped on the train selling oil short last week. More about the trades in a bit.
The dents in the armor of skyrocketing oil are already in place, and the stage is being set for oil to fall. Most players are on the opposite side, looking to ride oil past $200 and beyond. I not only view even higher oil prices unlikely, but $200 oil is next to impossible in the time frame being put forth.
My views are simple, based on economic principles that have been around since Cain traded vegetables with Abel.
1. Supply
2. Demand
3. Strength/Weakness of the Dollar
Most of us understand supply and demand. (All of you oil company conspiracy theorists can stop reading now). China wants more oil, the emerging markets are demanding more, and the USA isn't curbing its appetite for oil. We are using up oil as fast as it comes out of the ground. With more people demanding it, the price goes up, of course. Couple this with countries falling behind with total oil output, like Russia, and further price increases are expected. To make the perfect storm complete, oil is priced in US dollars, so as the US dollar weakens, oil creeps upward. Speculators are there to play the game, and they sometimes get caught up in the hysteria. It seems that oil is destined to continue its upward climb, with no end in sight.
If it were only that easy.
Find out why oil's rise cannot, and will not, continue according to Jonathan Coyle.
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