Duke

ConocoPhillips: Why the Sell-off?

Oil trades in US dollars according to OPEC rules. When the US monetary supply is increased the value of the dollar declines and the price of oil increases to compensate for the currency loss. Unless the US stops producing more currency, which is needed for all the financial bailouts , and the interest rates begin to increase oil will remain over valued. Fossil fuels will dominate in global energy production at approx 94 % , even if solar and wind increase they are at such small levels today, 0.2% and 2.0%, they are also limited by production capacity and will not replace fossil fuels soon. In addition the pacific rim countries are expanding with new roads and utilities thus global energy demand will remain high. The decline in the oil sector was related to the recent reports of opening up domestic oil reserves which prompted the recent decline in oil, now defeated by Congress , thus oil will remain high, Futures contracts at 2013 are still in the $135/barrel range.