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It's better to accord oil's price movement as a phenomenon that is typical of commodities, rather than an investment bubble.

By using the term bubble, you are engaging the notion of an investment bubble.

However, there remains no evidence that oil was an investment bubble. The best work on this has shown the opposite.

From a case-building or logic standpoint, one runs into further problems by calling oil a bubble as it means just about everything on the planet was a bubble. Copper, credit, equity prices, uranium, coal, wheat, shipping costs, San Francisco victorian homes, UK football clubs, and fine art.

Why use the bubble designation when the historically large amplitude of commodity prices in boom-bust cycles is more than an adequate explanation? I think you use it because there has been a zeitgeist for "bubbles" since the COMPQ bubble.

Investment bubbles are really only germane to asset classes where the supply can easily be expanded, at the same time capital investment continues to pour in. US Treasuries, equities, deeds to postage stamp sized lots of swampland, and so on.

For your next chart may I suggest the following? Plot the production of oil from non-OPEC from 2003-2008 behind the price of oil.

Then ask yourself if you see a bubble.



Ummm, did you notice that the 200 day moving average displayed absolutely no support when it was violated in August? So much for the textbook importance of the 200 day moving average in that instance.

Is this typical of what one can expect out of Bespoke? This type of analysis is not worth the price of a free trial.

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