WTF oil

I really don't believe this mess that the oil price followed supply and demand when it goes up $12 in two days.

The fact that consumers and businesses are starting to cut back their consumption shows that this argument has little weight. I really don't know what the rest of the world is dealing with these prices, but I doubt they can keep up with these high prices. Something has to give.

The problem is that people believe that oil will climb, hearing high price quotes like $150 or even $200 a barrel coming this summer. If People believe oil will go higher, oil will go higher. The fact that oil has become an investment vehicle for people who don't usually trade commodities is troubling.

I don't think these high prices are sustainable, and eventually demand will shock the system. The problem is that there might be a lag here before it gets to all the traders.

I guess one of the reasons why people think oil will go higher, is the belief in markets. In economics, we are taught that markets are efficient allocators of goods are resources. I think markets can be far from efficient, hence why I invest. There will eventually be a correction when the markets fall way out of balance, but right now we all have to pay for irrational exuberance at the gas pump.

My paper trade was going well, but got stopped out of this morning, but what can you do? The only thing that took a hit was my ego.