Saturday, July 26, 2008

Oil's Slippery Logic

Oil prices have slipped $23 dollars since they topped $147. The factors that pushed oil to those levels remain present, and will remain present for the forseeable future. Expect a lot of volatility. Any demand concessions made by the US will be sucked up by China and India. There is no slack in the market, so expect massive up and downward spikes, but the trend overall remains higher.

My Prediction:

I don't see prices going under $110 for the remainder of the year, and see them reaching $150 or higher, even $170, towards the tailend of 2008, particular once that report on the world's wells comes out in August.
clipped from
Current Oil Price `Not Expensive,' Gabrielli Says (Update1)

July 25 (Bloomberg) -- Crude oil at $126 a barrel is ``not
expensive,'' considering production costs and rising demand, said
Jose Sergio Gabrielli, chief executive officer of Brazil's
government-controlled oil company, Petroleo Brasileiro SA.

``Oil is an exhaustible resource,'' Gabrielli said in an
interview today in Rio de Janeiro. ``In order to produce new oil
to replace the barrel you just used, you have to find oil that's
much more expensive than what you already produced.''
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