Oops. Maybe oil won't be dropping to $90 per barrel. Someone told me that yesterday's remarkable spike in price was due to short sellers covering their positions. Another explanation is that the markets realize that the US government will be required to deflate the currency in order to pay for the huge financial industry bail-outs, and that that future inflation is reflected in today's oil price.
In any event, oil could still reach $90 a barrel.
This prediction is based on a completely different criteria. I heard last Friday that the Texas Railroad Commission is seeking new workers to process the large backlog of drilling permits that it has. This to me is a sure sign that the oil drilling boom in Texas at least has peaked.
Remember when every person you knew was going to be a mortgage broker because fortunes were being made in the housing industry? This was a clear indication that the housing bubble was at the top.
Same thing here. When everyone and his dog wants to be a wildcatter, we know the market has topped. Another way to check this production is to see how many petroleum engineers are graduating. If it is at an all time high, the top has come and gone. Look for another short term collapse in oil prices.
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