The speculative madness continues as prices rise over rumors, spread by Morgan Stanley, of $150 a barrel oil. An unexpected rise in U.S. unemployment, half a percent from 5 to 5.5% announced yesterday, sent the Dow Jones Industrial Average into a 400 point plunge. Investors moved their money into commodities, particularly oil, which further weakens the dollar and fuels a spiral of higher oil prices, weaker dollar and greater unemployment.
Oil topped $138/barrel yesterday. Meanwhile demand continues to fall worldwide because of high prices. Supply and demand are ignored at your peril, investors. Don’t get caught with your pants down again. When oil falls to a rational market price, as it must, the dollar will come back and oil speculators will suffer.