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Weaker Demand? Oil Prices Rise Anyway

There has been a lot of speculation a weakening economy would reduce demand for oil, leading to lower prices. Putting aside the question of whether the economy will rebound — a distinct possibility after the stimulus package and Fed rate cutes — prices do not seem to be responding to demand.

In today’s Wall Street Journal, “Weaking Demand? Oil Still Passes $100,” authors Neil King, Jr. and Ana Campoy cite several key factors supporting prices including speculation and political unrest in Nigeria and Venezuela. Others are concerned about refinery capacity and damage to existing facilities.

Finally, of course, there is OPEC. Whenever prices drop a bit, an OPEC production cut seems to be in prospect.

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