Description: Market veterans were expecting oil prices to reach $100 a barrel even before the political turmoil in the Middle East and North Africa hit the fan this year, and now that oil’s reached triple digits, predicting prices is more daunting than ever.

Source: Marletwatch.com

Date: 03/04/2011

Link: http://www.marketwatch.com/story/100-oil-here-to-stay-or-soon-to-go-2011-03-03?siteid=nwtwk

Questions for discussion: 

• Summarize the reasons for the rapid rise in oil prices recently.
• What are the arguments suggesting they may fall back, continue to rise, or stabilize?
• What is your view of oil prices over the next 12 months?
• How would you suggest an investor and financial manager of firm affected by oil prices approach this environment?
• How could derivatives play a role in this environment from an investor’s and financial manager’s point of view looking to hedge?