Take a hike

Crude oil and its derivatives epitomize the notion that besides matching bids and offers, there often lies in the background a multitude of factors, which not only affect prices but also, and more importantly, the perception about supply, capacity, consumption and relative tightness/availability of the product. The movements in crude oil have been, to a large extent, a barometer of political and economic guesstimates – and the massive run up in prices will no doubt have an effect on the global economy. It is not so much the nominal level of prices that leads to alarm, but the trajectory and what prices are in effect “saying” about the future. Since the Asian crisis of 1998, often a key data point in markets, prices of light sweet crude oil have quadrupled from just below $10 to nearly $42. The rise, from a technical standpoint, has been reinforced by several NYMEX closes