Why Crude Will Reach $100 / Barrel
Source: Seeking Alpha, Ivan Kitov (7/15/09)
". . .the price has been following a predetermined trajectory, as it has been demonstrating since 1980."
The period between January 2008 and likely the end of 2010 is characterized by an elevated volatility in oil price, but the evolution of the price is not random. Moreover, even after the start of crisis in 2008, the price has been following a predetermined trajectory, as it has been demonstrating since 1980.
The June reading of the PPI shows a rise to 174.1 from 170.2 in May, and the producer price index of crude petroleum (domestic production) has increased by ~32 points: 188.9 after 157 in May.
Our assumption on the average monthly increment for the crude petroleum index was +20, and for the PPI +1. So, the increase in June was larger than predicted. This increment might be compensated by weaker growth in the following months. For example, oil price in the first half of July rather demonstrates a slight decrease.
According to the prediction, the price should break the $100 level before the end of 2009.