patrickstar

Fundamental arguments for high oil price:

>Rising demand from developing coutries (china, india..).
>Geo-political tensions in the middle east (iran).
>Falling capacity or inability to cost-effectively increase production - ('peak oil').
>Weak dollar - which pushes the price (when measured in dollars) up by default, and also carries a risk of destablising the world economy - which could in turn impact oil prices (if the current relatively harmonious trade relations break down).

On top of that you apparently have a lot of speculation in the market and the seemingly relentless push (self fullfilling prophecy as it was put earlier) to the psychologically significant $100/barrel mark.

I think the key question is: What proportion of the price is due to speculation?
And the answer will probably come shortly after it hits $100, as you'd probably expect a pull back proportional to the level of speculation at that point if there was nothing else holding it up.. probably including an over-reaction on any downward movement.

Of course it could go to $100 and stick there, or shoot on up to $150 in no time. I really have no idea! and as such will not be betting on it!


My predicition (just for fun):
$100 reached before christmas (maybe this week??).
Short term pull back to about $80-$85.

Mid to long term who knows.. Depends on how bad the US recession is and how much it impacts on the rest of the world. Also them not doing anything rash in Iran..

Unless you have a major slowdown in China and other developing countries (brought about by US contagion) then I can see $150/barrel within a year maybe, as the dollar continues to devalue relative to the asian/arab currencies.