“Longer term, irrational markets return to pricing based on fundamental factors like the cost to produce something and make a profit. In the long run, $40/bbl oil is not a price sufficient to entice enough oil producers to produce at a level that can satisfy global demand. Hence, prices will rise.”
My economics background tells me that what we are witnessing in the price of oil is indeed very rational, not irrational.
The current price level confirms to me that oil has been seriously overpriced compared to its intrinsic value. Just because the kingdoms in the ME need higher prices to BE thier budgets, does not mean the oil is worth that higher price.
Cartels have distorted the value of this commodity, and when they can no longer control, the value will seek a rational level.
Hope your job is secure in current fluctutions. Nice to be retired and watching from the sidelines,
As the article states, the current price of oil is above some of the existing production cost. That won't last and demand for oil continues to climb.