On Jul 14, 2006, at 3:15 PM, Willy Greenfields wrote:
> Up until the recent (last week or so) run-up, I most
> often heard a $10 premium cited, though that covered
> both speculation and political risk. One of the more
> compelling reads I saw had the current crude prices
> being driven not so much by the US' huge consumption
> but rather by Asia's increasing marginal demand
> removing all slack. A US recession could only make for
> China/India buying greater volumes at the ask and
> supporting the price.
But a US recession would almost certainly mean a Chinese recession, no? And with Chinese investment around 40% of GDP, that's an accident waiting to happen.
I'm old enough to remember all the talk about the long-term oil picture in 1979-81. A new energy universe, $100/barrel was the next stop. Then, a recession, and a few years later, $10 oil. History never repeats, etc. etc., but I'm always skeptical of "everything has changed" stories. Stories often follow prices, not vice versa.
Doug