117 comments on You might have heard that CLX07 hit $86/bbl today. Oil--in the next month--will...
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117 comments on You might have heard that CLX07 hit $86/bbl today. Oil--in the next month--will...
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I'm sorry, I couldn't disagree more.
1. IF there's a recession, that'll mean less, not more oil demand, thus leading to lower prices.
2. Food inflation does not impact oil inflation unless there is a recession, in which case, oil goes down.
The dollar has stabilized at 1,42 in euros since last month, when oil hit 82. The current 5$ rise is therefore not because of the descending dollar. And oil is also rising in euros, so this is no "excuse" at all.
The underlying fundamental is shrinking supply (non-OPEC), shrinking stocks (USA) and growing demand (Chindia). Demand has been higher than supply all year long.
"1. IF there's a recession, that'll mean less, not more oil demand, thus leading to lower prices."
Ah, but you discount the effect of panic and hoarding (personal and national) on prices.
People don't 'hoard' during recessions. They bemoan their woes to congress and the Democrats give them $5000 baby bonds.
I am talking about inflation adjusted prices.
On a recession, every price go down (deflation), but oil moves less than average. On a food inflation, every price go up, but oil, again, moves less than average.