Liquidity surges, oil surges

Well, energy markets sure aren't taking the news of the Federal Reserve's new "Global Liquidity Plan" very well. It seems that the combination of less oil inventory and more paper money inventory is having the predictable result - higher oil prices.
Earlier today, the Energy Information Administration reported that U.S. inventories of crude oil fell again, though not nearly as big a drop as last week. The days of "historically high" stockpiles appear to be about over in he U.S. - they've been over in most of the rest of the world for some time now.

The organization's Short Term Energy Outlook calls for lower prices by the end of winter - all the way down to $86 a barrel.

Wow! Could Steve Forbes have ever imagined that, here in 2007, someone would be predicting that oil prices would fall to $86?

Everyone seems to be counting on a big world-wide economic slowdown to ratchet back energy consumption so that existing production levels will result in lower prices.

If that does occur, then there will be a host of other problems, all of which are likely to be countered by even lower interest rates (primarily in the U.S.) and even more "liquidity" (primarily in the U.S.) causing oil-exporters to rethink what paper money (primarily in the U.S.) is really worth these days.

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