Oil May Hit $90/Bbl, But Gains Risk Creating Bubble - Analysts |
| Wall Street Journal - Nov 8, 2010 |
Oil bulls' imaginations were stoked last week after the Saudi oil minister announced the country's comfort zone for crude-oil prices increased from $70-$80 per barrel to $70-$90 per barrel, setting a new psychological target for the market. But market fundamentals don't support a $90-a-barrel price tag, oil analysts told Dow Jones Newswires.
"A $90/bbl price tag for oil is not justifiable. Oil is trading higher on QE2, but as has been seen today, as soon as the dollar bounces, oil stalls," said VTB Capital's vice president of commodities research, Andrey Kryuchenkov.
Last week oil futures soared on a weak dollar in the wake of the Fed's announcement of further quantitative easing. Front-month December Nymex light, sweet crude hit a 25-month high of $87.49 a barrel in Asian trading Monday, within striking distance of the $90/Bbl level. Since then, however, prices have fallen as the return of concerns over European sovereign debt issues forced oil prices to retreat along with the euro.
"Oil has had a good run higher on upbeat sentiment but now investors are assessing how much the effects of quantitative easing have already been priced in because there's been no real change in the fundamentals," said Kryuchenkov.
Read Full Article from Wall Street Journal
- Posted: 2010-11-08 14:14:05
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