Oil prices are levitating

This fellow, who seems to be much more qualified than myself to comment on such things, thinks oil prices are levitating like hot air balloons held up by various “sources of heat” – essentially a whole set of anxieties that are overplayed. He argues that the futures market has eclipsed OPEC in influence over prices. Anyway, he disputes and takes apart the “high prices are here to stay consensus,” and argues that only geopolitical uncertainties are a real threat to the eventual drop in prices.

A Market In Levitation : How Long Can It Last ?

Similarly, current oil prices do not imply a change in the laws of economics. Prices can be lifted temporarily far above what is required to ensure an adequate level of capacity all along the supply chain, provided sufficient heat is applied (in the form of fear of supply disruptions, market anxiety, peak oil phenomenon, speculation, geopolitical tensions, hurricanes or what have you). But the market will remain in such a state of levitation, just like a hot air balloon does, so long as the supply of “heat� continues. How long will the current sources of “heat� last? This is the crucial question that underlies the title of this presentation.

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