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The Brightest Stars in the Commodities Boom, Part I

Posted on June 20, 2008

Thursday saw the market's kneejerk reaction of oil dropping of $4 a barrel, in response to China's announcement of gasoline and diesel price boost of 16%. Most traders perceived higher price will suppress Chinese demand on oil. They know nothing about what's going on in China.After the price boost, gasoline still costs only US$3 a gallon, far cheaper than prices in the US and Europe. It will not supress demand at all; consider that only wealthest 3% of households in China own a vehicle. The Chinese transportation fuel market is in severe short supply. Refineries are unwilling to increase produ...

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crude , etf , oil , refinery