
As I have written earlier, oil is a commodity. It may seem like its own class of asset but it is still a commodity. Accordingly, the dynamics surrounding oil also affects other commodities. One of the key market dynamics putting downward pressure on the global price of oil is weakening demand from Europe, China, and elsewhere. The only bright spot in the global economic scene currently is the United States which is enjoying continued recovery. While we can debate until the cows come home regarding how ‘solid’ the US’ recovery is, it’s jobless figures do show a sustained uptick. Since the US is the only major economy enjoying a growing economy. Unfortunately, it might not be big enough to soak up excess production of commodities. This is what’s at play with the recent declines of materials stocks like Freeport McMoran.