Thursday, May 22, 2008

Oil Supply Peak

Taking the supply peak further, what does that mean. Recently their has been talk of oil pushing the 3rd standard deviation from its 200 dma and hence on a statisitical basis, it should correct to at least 1 std dev. In addition, the oil/gold ratio was pushing multi year lows. However, as with the great sub prime model, everything works fine until one of the variables becomes in accurate. The concept of supply peaking is going to result in all sorts of model distortions.

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