Saturday, October 25, 2008

Speculators bet oil price will fall

``It certainly seems to me that we could get down to $50 a barrel,'' Adam Sieminski, Deutsche Bank's chief energy economist, said in a Bloomberg Radio interview today. ``You could look at the OPEC cut as a sign of weakness, not strength.''

The cost of the option jumped on speculation that an output cut announced today by the Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world's oil, won't be enough to stem plunging prices.
economix explains the classic theory behind why it is difficult to collude to hold down production.

Net Oil Exports produces this telling chart. Discussion here.



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