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John Lounsbury

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  • Wall Street Breakfast: Must-Know News [View article]
    captainjohann - - -

    You correctly point out that supply and demand for oil have not changed much in the past few months. The emphasis is on the word much. Several months ago the oil markets were priced for a continuation of the uptrend in consumption that has characterized the past few years. That uptrend has slowed, possibly leveled out temporarily, and this could last for some time, depending on the nature of the anticipated recession.

    Oil has come down because a growth premium was priced in at $140. All the wat through the rapid rise in oil many experts were saying that the current supply and demand warranted only $50 to $80 a barrel, depending on which expert you listened to. Now that anticpated rapid consumption growth is being taken out of the pricing assumptions of traders (for the time being), oil should come down closer to that $50 - $80 range. If past patterns are repeated, oil may well dip below $50 because overcorrection often occurs.
    Oct 7 10:18 AM | Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    captainjohann - - -

    Oil prices are not directly related to the bailout package. Oil has been dropping, partly because current demand is reduced, and partly because the market is forward looking to a recession, possibly worldwide, that will have significant length and depth. Demand will remain depressed into the bottom of any worldwide recession.
    Oct 7 10:08 AM | Likes Like |Link to Comment
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