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TMFDoraemon (97.62)

What's next for oil?

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November 04, 2009 – Comments (2) | RELATED TICKERS: XOM , COP , PTR

I happen to think oil is pretty reasonably priced given the long-term demand growth from emerging markets -- yes, consumption growth in China is at the top of that list.

As for near-term pricing, you've got me. There's plenty of supply in relation to demand, but then there's this chart in a research report I read from Credit Suisse this morning that shows the correlation between the price of oil and the S&P500.  

oil-sp500-correlation

Pretty interesting relationship with interesting potential consequences, I think.

 

 

2 Comments – Post Your Own

#1) On November 04, 2009 at 3:10 PM, miteycasey (98.79) wrote:

I think many people are using oil as a hedge against inflation.

It has very little to do with the supply/demand.

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#2) On November 06, 2009 at 1:22 PM, TMFDoraemon (97.62) wrote:

Yes, that's pretty much the point of the chart.  That it has become more of a financial instrument than reflective of current supply and demand.  There is still the causation vs. correlation argument here, but that's a large, sudden, unprecedented jump in correlation.

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