7-17-08 by dugan
As the price of a barrel of crude oil dropped to under $130 today,
down from its high of $145-plus a barrel, I picked this as quote ‘o the
day: "We have gasoline demand coming down, and that’s putting pressure
on
the market," said Darin Newsom, senior analyst at DTN, a commodities
information provider. "Bullish demand news just simply isn’t there."
Yet U.S. gasoline demand has been dropping steadily for months, and
global unrest is not materially different today than it was last week.
There’s just no breaking news from Nigeria or Iran that traders can
grab. Does this mean the oil market is really controlled by the foreign
editor of the Associated Press?
Yeah, that’s ridiculous. Maybe.
It
could be that the bubble is actually deflating, or about to, and
analysts are grasping for "rational" downside explanations the same way
they did when oil was soaring. Along the same lines, oil stocks are
dropping.
But what keeps gnawing at me is that oil has done so
much damage to consumers and the economy. Government stood by,
irrationally refusing to regulate or oversee a market with the power to
send the economy tumbling and inflation soaring. History won’t be kind.