All These Geopolitical Issues - See Crude Advance Further

Monday, August 22, 2005

Last week's shortlived pullback of crude oil prices into the 63-dollar range seems to have been the golden opportunity to go long again. Summing up all geopolitical and demand issues it appears as the next round mark of 70 dollars for a barrel of the black gold is just around the corner - maybe as early as by the end of this month.
The most important issues that will nullify the chances of another significant drop in prices span around the globe:
Amidst all these dire news there is only one glimmer of hope left. Due to rapidly rising gasoline and diesel prices individual demand may slow down a little. Go to any online edition of newspapers from around the world and you will notice there are stories telling that drivers are cutting back on their car rides virtually everywhere. Even a good part readers of the Wall Street Journal, hardly a lower-income group, answered in poll last week that they have already changed their driving habits.
Federal Reserve chairman Alan Greenspan had said in July he expects consumers to shift from their gas-guzzling SUV's to more energy efficient cars. Just check when used car prices take a downturn and you will be able to pinpoint the beginning of that move.
Jokes aside, it looks as if the economy is finally getting dented from higher oil prices. Although experts do not tire to point out that oil is still cheaper than in the early 1980's in real dollar terms one has to remind readers that we are only an inch away from those levels as this slightly outdated chart from Oregon State University for gasoline prices shows. For a crude oil price chart in 2004 dollars click here.


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