Monday, March 23, 2009

Oil Zigs to $52, and the foolish begin to prognosticate

Today, right now the JSE is looking healthy, climbing to over 21 000 (after having stagnated at under 19 000 and worse for a few weeks). Oil prices had also stagnated at around $45 or less, and are now skipping over $50.

After oil's rollercoaster ride last year, any economist worth his salt would not offer bold or specific predictions for this year, let alone next month. My predictions have so far held water - I predicted last week that we'd see prices begin their ascendency. I believe we'll see volatility return and we'll also see oil prices hop upward as stock markets 'apparently recover'. I believe these hops will turn into leaps, with the market continuous citing 'unexpected' this and 'unexpected' that, related to inventories, demand etc.

People are in for a nasty shock. While it was oil prices that were behind the market convulsions last year, they apparently seem to be 'solved' right now. So we may see the pretense of a 'recovery' for some weeks and even months. Of course, as stock markets rise, oil prices will too. The result: further convulsions, each time destabilising the markets, and knocking more and more players into oblivion. Lots of money will lost as investments in energy based delusions (automakers, mortgage-based banks) backfire badly. You have been warned.
clipped from
Oil prices slip but hold above $50

KUALA LUMPUR, Malaysia – Oil prices rose above $52 a barrel Monday in Asia, boosted by stronger Asian stock markets amid plans by the U.S. government to buy bad assets from banks to contain the financial crisis.

Benchmark crude for May delivery rose 45 cents to $52.52 a barrel by midday in electronic trading on the New York Mercantile Exchange. The contract edged up 3 cents on Friday to settle at $52.07, the first time crude ended the week above $50 since last year.

Algeria's Energy Minister Chakib Khelil predicted Sunday that crude oil prices could hit $60 per barrel by the end of the year.

Banc of America Securities-Merrill Lynch has also raised its forecast for crude oil prices to $52 a barrel this year, from $50 a barrel, on the back of a tighter-than-expected oil market balance.

It expects a shallow oil demand recovery in 2010, and sees prices at $62 a barrel next year.

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