October 24, 2005

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Oil Prices Headed for the Slippery Slope?

Saw this article today in Xinhua on how Chinese demand for imported oil fell 18% this year in response to higher energy prices and depressed refining margins due to China's price controls.

I have suspected for some time that oil prices today are artificially high, driven by speculation and government strategic buying programs. The major reason that has been provided by oil price bulls has been that there is a strategic, secular increase in oil prices created by China and that we'll just have to get used to $65 per barrel.

Let's see how much longer that continues with increasing interest rates and slowing demand, and continued decreases in oil imports from China...

posted by HK Dave on 10.24.05 at 11:03 AM in the China economy category.


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