Thursday, February 23, 2006

55 is the new 30.

MSN Money: 5 stocks for the new oil reality.

I have a slightly different view than Jubak on why there is a price floor in the low 50's: I think OPEC wants the floor there, and has the power to maintain it due to the tightness in the market currently. So I don't think oil in the 50s is about a risk premium. On the other hand, in terms of the volatility in oil prices, that I attribute to the market uncertainty over what the risk premium should be above the mid 50s.

I agree though that the price appears likely to stay in this higher range, unless demand gives in.