>From Stephen Lawrence ...
> I was surprised -- I thought we were heading for the cliff a lot > faster than this, and $200/bbl oil next year was a no-brainer. But, > apparently not. > Impressive analysis. Several weeks ago the Kiplinger Letter claimed that current commodity prices are significantly above what supply and demand factors would historically dictate. See: http://www.kiplinger.com/businessresource/forecast/archive/commodity_prices_near_turning_point_080409.html http://tinyurl.com/46a6as What's behind it? Investors chasing high returns...pouring cash into commodity futures because other choices seem less attractive. Herd behavior. What could burst the bubble? Sez Kiplinger: "A number of factors could burst the commodity balloon: A cut in worldwide commodity demand, big stock market gains, a more stable dollar or tame inflation signals. Prices will drop by about 30% if all these factors come into play at once, but declines will be smaller and gradual if signals are mixed. Oil will slide to $85 a barrel, with a smaller reduction at the pump, because risk is still a factor." Just to be clear on this point, Kiplinger doesn't expect the bottom to fall out. Unfortunately, Natural Gas won't come down. Sez Kiplinger: "Demand for natural gas for industrial, heating and other uses is sure to remain strong, and prices, currently around $9 per million British thermal units, may top $10 per million British thermal units next winter. Natural gas supplies are roughly adequate for normal weather, but harsh conditions are likely to cause real stress. Fading quickly: hopes that liquefied natural gas will increase supplies. LNG is going to Asian and European buyers, who are outbidding U.S. purchasers." Personal reflections: I hope they're right. Not sure that I do. Regards Steven Vincent Johnson www.OrionWorks.com www.zazzle.com/orionworks
