The Market Recursion Continues

Oil surges $11 to record $138 – Jun. 6, 2008

NEW YORK (CNNMoney.com) — Oil prices shot up nearly $11 a barrel and settled Friday at a record $138.54 on geopolitical jitters, a dollar decline and a forecast that oil would hit $150 by July 4.

Friday’s spike in the July contract for light crude on the New York Mercantile Exchange marks the largest single-day increase in oil prices on record. The contract hit an intraday record of $139.12, breaking the previous trading record of $135.09.

This looks like pretty much rampant speculation.  Everyone is trying to lock-in a good price (see Dodge’s 3 year price guarantee) and that’s pushing demand even further, plus problems in Africa and Iraq and a new round of sanctions on Iran…all pushing future demand through the roof.

Ultimately we have a flat-finite supply curve and an exponential-infinite demand curve, leading to a halfway-infinite price curve, which is to say, it will increase like demand, just half as quickly.

The price will continue to increase until the fundamentals change.  It will only level for a time, it will not decrease for an extended period of time for the foreseeable future.

Add that analysis to the others.