We might not make it to $66.60. It is true. Do you remember our prediction of the price of crude oil on the Nymex on Christmas Day? Unlike last year where we were on the money with our prediction for Christmas Eve to within a few cents - something we said at the time was very lucky indeed - this year we are unlikely to reach our ordained target of the devils price.
So look, we have gone through all the things we think are distorting the market. The regular readers of this column know what they are, market distortion, markets and ... well ... the market. Markets do not reflect reality; they reflect the reality of power.
What is driving prices and what has been driving prices since 2003, is fundamentals. The entire oil market - and to a large extent the fate of the global economy - sits on the shoulders of China and India. These two huge nation states, murderous, corrupt and with so many of their populations impoverished, await an influx of oil. They await an influx that will drive their car ownership, their house ownership and their property ownership.
Of course the people who stand to benefit are the elite of India and China. The billionaires of India and China are set to become squillionaires, trillionaires. It is not just they who will never need to work again; it is their children, their children's children. Until the people take it back from them and hang them from lampposts that is.
At the current time the call on OPEC to increase output just turned to dust. OPEC does not need to increase output because the run up in prices to $99 a barrel of oil was meaningless. OPEC will only reduce its output. It will only bolster prices. It is tedious but we do have to say that three years ago we told you that OPEC had lost control of the upside of the oil market. OPEC can only control the fall in the price of crude.
The idea that OPEC was going to add 500,000 barrels per day of output to the market was a non starter. Why would it? Has there been a recession? Is there a slowdown like there was after 9-11? Are you out of work? If you are you do not count. A few people may have been thrown out of work in New York and London but so what, you are the dross, the flotsam on the wave of capital.
But if you think that the world economy has been 'adding value' since the dot-com boom collapsed think again. The only thing holding up the global financial system is the influx of cheap printed money. If you print more money then the worst thing that can happen is it adds a liquidity boom. Then all the people who print the money get paid out. They hide the money in banks who evade tax - and we know that from personal experience how easy it is.
On the other side of the world these non-white folks are adding to inflation. They are buying cars and adding air con and heating to their homes. Sure the real problem lies with the United States as its population chuck hydrocarbons down the drain and into the atmosphere. But then that is why you have power, so you can do what you want.
The rise in oil prices spurred a rise in energy prices. The rise in energy prices spurred a rise in commodity prices which slowed the rise in oil production. The rise in energy prices hurt the rich economies so the rich printed more money for themselves in an inflated market. But those pesky Chinese and Indians keep subsidising their markets and they keep on wanting the same level of comfort that the people in the U.S. and E.U. have.
All of which is an unfortunate broken circle that can only be closed by recession and the longer it goes on the worse it will be the worse it will be the more $66.60 a barrel will seem like wishful thinking.
By Arrangement with www.resourceinvestor.com
