Price of Oil Doesn

Houston investment banker Matt Simmons likes to say about oil,


But at least the black liquid has lately been trading within a defined range. Earlier in the spring and summer of 2007, oil steadily ran up from below $55 to over $90.

Why?

Demand from the developing world has been increasing, of course. And there is a growing awareness within oil trading circles of the issues affecting future oil supplies. Depletion is the other side of the coin of extraction. Depletion never takes a holiday.

Then something interesting happened. Toward the end of 2007, oil started to trade at a price plateau, drifting down as low as $85 per barrel and spiking as high as $100. Yes, the price of oil went up and down. But in general, the base price for oil has been in the low $90s since about the end of October.

What halted the oil price increases toward the end of 2007? Lots of things.

Daily Reckoning