OPEC President Chakib Khelil said that had it not been for the weak dollar, political tensions and speculation, oil prices would probably be around $70 a barrel. “In terms of fundamentals, there is no problem of supply and demand. There is much more a bubble due to speculation, which is based on a depreciating dollar and geopolitical tensions,” Khelil said yesterday.
See Current Oil Prices are unjustifiable.

Saudi Arabia yesterday called for an urgent meeting of oil producing and consuming countries to discuss what it called the “unjustifiable rise in oil prices.” It also offered to coordinate with the Organization of Petroleum Exporting Countries (OPEC) and other major producers to ensure adequate supply in order to curb prices.

Co-ordinated top down efforts to support the dollar and curb speculation, along with ongoing demand destruction from a slowing global economy will ultimately prevail to drive commodity prices down from recent heights. Once it begins in earnest, the velocity of the correction is likely to be shock the many that have been conditioned by a 5 years bull run to expect only upside in these markets.

Beware of those selling “long-term” investment stories. We must survive the short term before we can benefit in the longer-term.