Indyphil

Is This Oil Bubble Going to Deflate?

What we must remember is that the Price MUST rise until supply matches demand. The demand destruction was neccessary to avoid inventory falling to zero. Its all well and good to point that demand has fallen slighty but the price has doubled in a year, but that misses the overall point. I think this article is helpful by pointing out the in-elasticity of demand, and the long lag times, but ultimatley the demand will need to fall more - and more and more - GLOBALLY to maintian current prices.

I expect the market is taking a breather on this news of demand destruction but will continue to rise as developing countries keep moving. When the Chindia demand stops rising (maybe when they quit subsidizing the stuff) thats when you can call a ceiling.

ETF STER - you are right to point out the % argument.
China consumes over 7mbpd. The 3rd highest behind Japan and USA - they may have surpassed Japan by now these are rough numbers based on 07 figures.

USA consumes about 12mbd, so China's 3.7% increase on a 7mbpd rate, washes away a 0.7% decrease on a 12mbpd habit.

You get the idea. Chindia is in charge now. Their tax policy (or subsidies) are in the driving seat.