Analysis: Oil Price Inflates as Speculators Bet on Stimulus
Oil prices are racing higher as investors bet that central bank cash will soon boost a market afraid of Middle East war and worried about North Sea supplies, but the rally looks increasingly inflated by speculative guesswork.
Oil is up almost a third in six weeks at a time when the world economy, and hence fuel demand, are extremely weak.
Today’s oil price assumes the U.S. Federal Reserve will soon launch a new round of quantitative easing to stimulate the economy, or that bellicose rhetoric between Israel and Iran will lead to conflict, or that North Sea production problems will be long-lasting.
