"The high [PRICE OF OIL PER BARREL] is developing a momentum of its own," said a pair of analysts at Commerzbank in Frankfurt, Germany. Bloomberg News reported that they said "the trend will soon be coming to an end, and that the subsequent correction will be all the more severe."THIS WILL HAPPEN SOONER RATHER THAN LATER, AND FASTER THAN YOU THINK.
"We see many of the essential ingredients for a classic asset bubble," said Edward Morse, chief energy economist at Lehman Brothers. Morse estimated that $90 billion has flowed into the biggest commodity indices in just more than two years, and more money has flowed into other exchanges, pushing up prices.
... "Performance-chasing financial inflows to commodities cause prices to rise, thus delivering good performance and, in turn, attracting even more inflows. This phenomenon can be self-fulfilling," Morse said. Ultimately, however, "commodities markets still have a physical aspect to them that must fundamentally balance."
He said that once the size of oil inventories and worldwide spare production capacity becomes clearer, "markets may face a sharp correction."
IT'S GONNA BE A TOUGH SUMMER FOR THE DEMS:
- THE WAR IN IRAQ IS GOING OK;
- THE RECESSION AIN'T GONNA HAPPEN;
- OIL PRICES ARE GOING TO DROP -
- AND THEY'RE ABOUT TO NOMINATE AN UNELECTABLE, INEXPERIENCED GAFFE-PRONE LEFTIST!