Weak demand on Oil

Watch out little cats, the big boys are really starting to play games in the price of oil. After starting out talking about Iran’s Missile program and its impact on oil demand, now James Ritterbusch, president of Ritterbusch & Associates is saying that demand maybe weak, so the price of oil plunges. My view is very simple and is based on basic economic, namely the rule of supply and demand. Supply is holding steady and in fact it is growing slightly. Demand is a bit more uncertain with large third world countries moving into the market. But how about the rest of the world? For the US the weak dollar is clearly causing the price of gas to climb rapidly and with that comes a reduction in demand within one of the largest world markets for petroleum. But the rest of the story is a recurring theme for me, the speculators. They are driving up the price of crude which in turn eventually drives up the price of gas. This is causing gas prices outside of the US to climb also. My guess is that the demand will start to fall in those countries as well.

So my simple formula is Delta Demand/Delta Supply equals the price. Let’s see, Supply is flat or growing and demand is shrinking, you can do the math, but I would bet that means price should fall.

So little cats watch out, the big boys are getting you buy their over inflated futures and then they will leave you holding the bag.