Commodity prices are being exacerbated by weakness in the financial stocks. Every time bad news comes out on a U.S. financial firm, commodity prices head higher as investment managers sell financial stocks and hide in commodities. Oil is definitely overpriced at $145 per barrel, but the price of oil will not decline until financial stocks stabilize at the end of 2008 or 2009.
This is not necessarily speculation as much as finding a place to hide when the U.S. economy heads south. bankruptcies increase and the dollar falls.
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