It's hard to argue that $125 crude oil is cheap, but the $20 break in prices is the leading edge of a potential sea-change for commodities. With politicians clamoring for blood, speculators are running for cover, with liquidation adding pressure to a variety of markets from gold to grain.
At stake is whether the underlying premise of one of the foundations of the bull market still makes sense. Do pension funds, endowments and other institutional investors still view commodities as a suitable tool for diversifying their portfolios? If they do, index fund selling may be somewhat limited. If they don't, the rug could be pulled out from oil companies, farmers and anyone else who sells raw materials.
To read the rest of Bryce Knorr's weekly energy review, click HERE.
Powered by iNet Solutions Group ©2011 All Rights Reserved.