Why oil is falling
“The commodities bubble is dead,” says David Callaway in MarketWatch. Oil is down almost 20 percent, and gold and agricultural commodities have also fallen steadily in recent weeks. This is due to supply and demand, but “not the way most of the pundits have argued”—it’s instead “the supply of investments in commodities vs. the demand from investors to buy them.” The market for commodities is small, so speculative “walls of hot money” can easily push up prices. And they have. But now, like “every other Wall Street fad,” the “hot money pendulum” has swung back away from the inflated market, at least temporarily. And it will swing again. But in this cycle, the “easy money” has been made.
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