Drop in Oil Price is Leading the Charge of Potential Changes for Commodities

Bryce Knorr reviews energy for the week and some of the ramifications it may bring.

It's hard to argue that $125 crude oil is cheap, but the $20 break in prices is the leading edge of a potential sea-change for commodities. With politicians clamoring for blood, speculators are running for cover, with liquidation adding pressure to a variety of markets from gold to grain.

At stake is whether the underlying premise of one of the foundations of the bull market still makes sense. Do pension funds, endowments and other institutional investors still view commodities as a suitable tool for diversifying their portfolios? If they do, index fund selling may be somewhat limited. If they don't, the rug could be pulled out from oil companies, farmers and anyone else who sells raw materials.

To read the rest of Bryce Knorr's weekly energy review, click HERE.

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