From the Globe and Mail come some words of economic caution about the price of crude:
“The energy market has been the Johnny-come-lately to the overall commodity bubble,” said New York-based trader Stephen Schork. “What the market is doing is what it was doing in 2008: Selling the [U.S.] dollar and buying commodities with it. In 2008, it was primarily about energy but traders got their heads handed to them. Now energy is following rather reluctantly.”
He said a further deterioration in the U.S. dollar (USD/EUR-I0.73-0.001-0.19%) would re-ignite crude prices, while a recovery in the greenback would result in a more substantial pullback in commodities, including oil.
Mr. Schork said it is tough to justify $85 to $90 per barrel for crude on the strength of economic fundamentals. A $90 crude price translates into $3 per gallon for gasoline in the United States, and “that is not sustainable,” he said.
Not sustainable.
Those two words just won’t go away.
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