CauseWithoutARebel's Journal: The new direction of oil

I want to make something very clear up front: I think oil is way overpriced.

To some extent, the price of oil is inflated due to the weak dollar, but that alone doesn't account for the massive runup in recent months. Some people will tell you it's a matter of supply and demand, but they're either ignorant or liars. Demand has proven to be quite elastic as the price increases. Obviously, it's not infinitely elastic, but it's much more elastic than wealthy speculators would like you to believe.

I'm not a soothsayer, but I'll say this: I think that a lot of very manipulative, crooked people are going to pull the rug out from under a whole bunch of suckers. If someone held a gun to my head and made me try to peg the real value of oil, I'd put it, right now, at around $95 a bbl, mostly accounted for by the weak dollar. Most of the runup in price happened after the magical $100 barrier was broken, and I think a lot of wealthy speculators with a lot of media access bought in before that psychological tipping point and bumped the fool's gold rush over the edge. Eventually, they'll want to take their ill-gotten profit and run with it, leaving a lot of greedy idiots holding a lot of futures contracts that are worth less than what they cost to buy.

Welcome to Wall Street. Sensibly regulated free markets are a wonderful thing. Too bad we have neither sensible regulations nor a free market.

You might wonder why I have nothing to say about the "big" loss in the markets today. It's quite simple, really: the markets are just riding a false rebound. Until the DOW stops fluctuating randomly on complete non-news and dips below 11k again, there's really nothing to talk about. Right now the markets are just in another period of false hope and I wouldn't be surprised to see them "correct" up to around 12k before they start another slow, dismal slide to new lows. The next wave of writedowns is inevitable, and the impact of Congress's idiotic socialist fiddling with taxpayer dollars is yet to be measured (I apologize for being crude, but if Congress gave half a dirty dog shit about the impact of failing banks, they'd explore sensible tax reform and significant budget cuts to help lessen the blow of failing banks on consumers, let the banks that made foolish business decisions fail, and let the other banks cannibalize the assets. Propping up proven failed business models with money unwillingly invested by sucker-punched taxpayers is an unforgivable act of robbery and nothing more).

Expect things to get much worse before they get better for good.