Oil Drops to $101!

Yes, that was a headline earlier this morning.

Oil Falls to Near $101 Amid Libyan Mediation Hopes!

$101! And headline writers are excited! You have got to be kidding! That was a headline. The drop in price was about 70 cents, maybe a $1.50 from the recent high. 

First, with the volatility in the Mideast, if there was a headline every time price of oil changed, headlines would be changing almost continuously.

Second, how did we even get to this, $100 oil when supplies at Cushing are straining storage facilities?

Third, how did we even get to $100 oil when (maybe) a million bbls of oil have been taken out of the system (Libya) but easily made up (some say) by Saudi Arabia?

Last autumn (2010), when oil was falling back toward $60, pundits on CNBC said that fundamentals did not even support a price as high as that. And now, we have a headline that "oil drops to $101!" Who would have thought?

Right now, WTI oil is being quoted at $101.75

And market futures are up significantly.

If nothing else, it gives us something other than the weather to talk about.

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[By the way, the 30-second sound bite explaining the drop in the price of oil earlier this morning followed an announcement for a pan-Arab plan to bring peace to Libya. It turns out that the plan was floated by Hugo Chavez, Venezuela, member of OPEC. A pan-Arabian plan to stabilize Libya floated by Chavez. Okay. That was the reporting of one pundit; obviously not verified.]