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Oil’s rise a bubble? – Metro US

Oil’s rise a bubble?

Oil’s meteoric rise to near $120 US a barrel looks like more than just another economic bubble — growing demand and tighter supplies are likely to keep prices high. Some analysts say even $200 a barrel would not be out of the question.

The latest price surge — oil came close to $120 a barrel Friday — has some key components of a classic bubble, when market prices climb far above their intrinsic value.

But growing worldwide thirst for crude means frustrated consumers probably won’t get any relief.
Many analysts believe the weakness of the U.S. dollar is a bigger factor than supply and demand at the heart of soaring prices because the soft dollar draws investors worried about inflation into commodities such as oil.

It also makes commodities less expensive for buyers operating in other currencies.