Crude oil can finally spike one last time before collapsing below $40a barrel – where did crude bulls go wrong?
Karen Gonzalves
Feb. 24, 2007

The crude oil is in long-term bear market. The crude oil bulls made bug noise about $100 a barrel sooner or later. They went wrong in predicting and understanding the world economies. The world economies in US, India, China, Euro Zone, and Brazil are prospering from liquidity created by debt. That is why non of these countries has really prospered ion the last six years if divide GDP growth by the rise in gold price.

The crude oil bulls failed to understand the deflation from bubble bursts and heavy debt of people on homes, cars, credit cards, business line of credits and other personal loans.

The crude oil demand is fueled by the liquidity and economic prosperity. India and China created a huge demand as the middle class in those countries adopted Western dreams and spent ruthlessly on cars, gadgets, cell phones and homes taking loans like never before.

Not only in US but also in India, China and Brazil people are facing serious trouble paying just the interest on loans. The crude demand is falling apart in the middle of the deflation that started last year from stagflation.

It is true that no new huge supply of crude oil has been found in many decades but then price depends not only on supply but also on demand. In a collapsing demand, crude has to come down below $30 a barrel like it was in 1990s. Indians, Chinese, Brazilians and Americans will have start thinking of saving again and paying off their huge debt. Where is economy that can support $100 a barrel crude?

Crude oil can finally spike one last time before collapsing below $40a barrel – where did crude bulls go wrong?
Karen Gonzalves
Indians, Chinese, Brazilians and Americans will have start thinking of saving again and paying off their huge debt. Where is economy that can support $100 a barrel crude?
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