Wednesday, February 20, 2008

Paying the Premium: Oil’s Fundamental Problem

The WSJ's Environmental Capital blog has an oil post that starts with pirates in neckties, includes a toga party and ends with a dwarf. All in under 400 words!

From EC:

How much of the price of oil can be chalked up to pirates in neckties?

More than half—or about $50 a barrel—says longtime Oppenheimer & Co. oil analyst Fadel Gheit.

After all, he says, world oil supply and demand has fluctuated only slightly since oil was at $60 a barrel. Signs now point to slowing demand growth, especially in developed countries, and no big supply shocks. So why would oil prices spike almost 5% in a single day, crossing the $100 mark Tuesday? And if fundamentals were the prime driver, why would it fall a few hours later?>>>MORE