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Originally Posted by lannarebirth  The price of oil is high, not due to supply/demand issues for the oil, but due to supply demand issues centering on oil's pricing mechanism, ie: oil futures. The public seems to think that commodities are a new investment class (which it's not) and allocate investment resources every month to buy the futures at the ask. there's been a constant bid under these commodities devoid of the underlying supply/demand dynamic. Consequently many "commodities funds" have built larger positions than is allowed by law. That's all going to get unwound at some point.
I'm not saying oil and other commodities will fall through the floor, or that in the future it might not go still higher based on real supplier/customer hedging activity. I'm only saying that isn't extant now and it's gonna get undone. |
That's what I'm talking about
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Written testimony of Mr Michael Masters
People tend to get all wrapped up in their intellectual arguments and want to show their education wasn't wasted. I find, however, that where governments and markets intersect it's best to think like a criminal and follow the money.