Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Elroy Jetson who wrote (12822)	10/4/2004 10:50:54 PM
From: mishedlo	Read Replies (2) of 116555

Plunger on OIL We have yet to see when and how it plays out. Will it be like the late 30s hike that collapsed a nascent recovery? Will housing begin a descent it can't be rescued from as in Japan? Will the housing collapse cause a Fed about turn and a new Nasdaq bubble? Will gold indeed get to $3,500 or wherever? These are the questions to be answered. I'll venture though a solution to the oil riddle. Remember * the back futures and forward prices of oil rose over the summer without open interest changing much * Saudi seems unhappy with the current oil price because they are hedged at $30 * China is trying to build a strategic oil reserve to hedge against a falling USD but lacks immediate capacity. Can anyone else add 1+1+1? With a backwarded oil price it makes little sense for China to actually hold oil in expensive storage. Guess who's on the other side of Saudi's hedge contracts. Plunger.

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