Oil No bubble trouble?

No bubble trouble?

Wednesday, June 18, 2008
How should investors interpret the latest findings from a UBS survey on attitudes toward oil prices?
The UBS survey of 1048 equity analysts and strategists concluded that most investors do not believe that oil prices are[amp]nbsp;a bubble about to pop: When asked “Are energy prices in a ‘bubble' similar to tech or real estate?”,[amp]nbsp;56 per cent of respondents answered ‘No' and 44 per cent answered ‘Yes', according to UBS.
“Our interpretation of results: it is no longer ‘contrarian' to expect prices to stay high,” said Thomas Doerflinger and David Bianco, strategists at UBS, in a note to clients.
Some people believe that you can't have a bubble when just about everyone believes there is a bubble – because that widespread skepticism would translate into rational prices. On the other hand, if few people believe there is a bubble, then prices have the means to keep rising. This is surely what drove the tech bubble in the late 1990s, when the "new era" view dominated those who said "this is nuts."
Contrarians might look at UBS's all-clear signal on the price of oil as a reason to be fearful that a bubble is indeed forming. Crude oil traded at $134.80 (U.S.) a barrel on Wednesday morning. So far this year, the price has risen just over 40 per cent.
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