Oil marches towards $150 a barrel

The price of oil continued its seemingly relentless march towards $150 a barrel today, driven by the simmering tensions between Iran and Israel.

The cost of a barrel of US crude hit $143.67 this morning, its highest-ever level. London Brent crude also reached a new peak of $143.81 a barrel. Both have more than doubled in the last twelve months, helping to fuel inflation and spark protests worldwide.

Traders said there are worries that Middle East oil supplies could be disrupted by the growing row between Iran and Israel, and speculation that military action could break out.

http://www.guardian.co.uk/business/2008/jun/30/oil/print

Speculation gone wild. Oil prices have completely detached themselves from reality a few months ago. Oil is up over 50% year to date - Demand has not gone up by 50% and the dollar has not fallen by 50%, so any correlation with the two is obviously bunk. Demand destruction is everywhere. The fundamentals all say lower oil prices. Speculators and Wall Street is milking every last penny out of the price of oil, while they still can. The Party is almost over...and they know it, especially since the Republican machine is toast.

Folks, just look at the chart of oil prices over the last year and compare to a chart of the Nasdaq from 2000-2001 and housing prices from 2005-2006 - they are almost all identical. What happened to the Nasdaq and Home prices? Yup. You've answered your own question - they plummeted faster than they rose. Cheap gas is coming soon....

yes, but the underlying cause could not be no more different. There was no shortage of technobubble shares, just demand going wild in buying frenzy. With oil, the problem is the supply side, supply for the global market (traded in New York and London), ie. world net exports of oil, have been dropping since 2005:

http://netoilexports.blogspot.com/

Worldwide demand is up and pushing at (or beyond)
the available worldwide supply. When this happens,
you don't see prices show any sort of linear rel-
ationship with demand; the curve goes "non-linear".

You can see this sort of phenomenon with daily traffic
on the highways. Traffic tends continue to move smoothly
and there's very little perceived congestion even as
more and more cars come out on the road. But at some
point, the road has reached its "carrying capacity"
and even slight increases in traffic above that point
bring massive congestion. At that point, the relationship
between traffic volume and congestion becomes non-linear.

Tesha

I know we are at a top. In 2000 everyone said the stock market rally was never going to end and look what happened. The Nasadq will not 5000 again for decades. What goes up, must come down. Period.