Oil is having another down day and I’m wondering how the press could top their stupid headlines from yesterday’s 4% drop. In the meantime, I thought I might post something about the depressing post I saw over at Paul Kedrosky’s blog. Check out the Fast Money interview with Matt Simmons.
The Oil Bubble Trouble Bubble, Kedrosky Blog
One of Simmons big points is that everyone thinks that oil is in a bubble and expects it to tank at any moment. He says that someone needs to put a floor under the oil contract so that this mentality can be broken and real progress towards energy independence can take place. I see his point but wonder if that floor is already in place from hedgers. These are the people, like the airlines, who are freaked out and will be buying contracts at any dip, won’t they? Check out the quote from American Airlines.
Our company continues to be severely challenged by the fuel crisis that has afflicted our entire industry, and we expect these difficulties to continue for the foreseeable future,” Chief Executive Officer Gerard Arpey said in the statement.
I suspect the floor is in and that we will not see sub-$100 oil ever again. That doesn’t mean that I wouldn’t love to be short the OIH right now.
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