FeverBuster

The Oil Bubble Will Meet the Same Fate as Tech, Housing

Oil bulls need to realize that as oil price rises, any cash profit they make in realized value decreases over time. Since oil contributes to inflation when it goes up, it essentially erodes the profit that you are making. Inflation becomes the check and balance for oil pricing. So, a dramatic price drop in oil to get inflation back in line would allow the market to explore higher prices once corrected in the future.

The Oil Bubble Will Meet the Same Fate as Tech, Housing

christletoe,

The last report from the EIA on gasoline indicated the opposite from you claim of being at an all time low and on the verge of shortages. Please post a reference for this claim.

Additionally, with oil being at an all time high, inventories have to be managed better to hedge against potential price drops like what we have seen in last few days. The higher the price of oil, the less the demand, and thus the less inventory needed as buffer. As the demand goes back up, so will inventories.

Offshore Drilling Isn't the Answer - Supply and Demand Is

18 billion barrels is close to 3 years worth of oil consumption by the US at 20 million barrels a day. I am not sure why that is not enough to go after and drill for.

Energy and Metals Charts

Regarding $7 drop:

"Investors hope that lower energy prices could help revive the flagging economy". Source: Yahoo

Oil is going to have to drop down below $100 to have any impact on the economy. But every bit helps. It will not last though, Iran will just launch another missile, or someone in Nigeria that has a gun will get mad, or maybe someone will spill a barrel of oil somewhere. You know that these type of things can really cause disruption of oil flow that will have devastating effects on the supply.

Energy and Metals Charts

I do not understand how a futures market of commodities can be charted in a way that provides overbought or oversold ranges since it is a complete different way of trading in relation to common stock buying and selling. To me your tying to fit a square peg into a round hole.

What We Can Do To Reverse the Oil Crisis

I support Bush in opening up drilling. However, it will not fix current problem of oil prices. Releasing oil out of the SPR as Phil has suggested would disrupt the insane trading going on. Add to that, increasing the interest rate by a .25% and you have a mix bag of weapons to counter balance the insanity of the market.