"How can we explain such emergency rally in oil prices? Is the answer as simple as supply and demand, since many imbalances in the oil industry would have us believe? Or is there something more sinister in the game, such as speculation or, as some have accused, direct manipulation? To our great surprise of their own underlying economic basis of the market (that is, supply and demand) to go a long way in explaining the run-up in oil prices in recent years, but can not alone account for the excessive growth we have seen this year, "said Adolfo Laurenti, a senior economist of Mesirow Financial in its June issue of Themes on global markets available at http://www.mesirowfinancial.com/economics/laurenti/themes/globalmkts_0608.pdf

In its June bulletin, Laurenti takes closer look at the factors that contributed to last the run-up in oil prices and shares his forecast for them, including:


-- Demand for oil exceeds its supply much of the last decade, with
major deficiencies occurring in 1999, 2002 and 2007. This forced
Economies around the world to a drop in existing reserves to meet
their needs, and eventually bid up the price of oil.

-- The world demand for oil should be stabilized and may even weaken
slightly, but is unlikely to contract sharply in the short term.
This means that production, consumption and not have to drive
correction in prices.

-- The real responsibility for malnutrition are directly in
Camp advanced economies. Indeed, between 2003 and 2007
production fell by 0.7 million barrels per day (mbd) in Norway, 0.4
mbd in the United Kingdom and 0,3 mbd in the U.S. producer in OPEC,
On the other hand, has been on the rise, increasing by 1 mbd in 2007 alone.

-- The reasons include the scarcity of supply: the national-owned oil companies
have no market incentives to increase investment (for example,
Venezuela); systemically low oil prices in the 1990s - $ 20 a barrel
on average - by a serious shortage of investment in exploration
and new equipment in the developed world; concerns about global
warming, and political instability interrupted the supply routes.



"Oil prices should fall from its recent height, and stabilize somewhere in the $ 90 to $ 100 per barrel range by the end of the year. Timing is tricky, however, and prices could easily top $ 150 a barrel before the correction. Consumers have reacted at higher prices, however, and if they do stay that high demand will fall back in the United States than currently projected, and prices will come down more aggressively next year, "concludes Laurenti.

June issue topic of global markets, as well as archived issues can be found at http://www.mesirowfinancial.com/.

Mesirow Financial is a diversified financial services company with headquarters in Chicago. Founded in 1937, it is an independent, employee-owned firms with $ 32.2 billion of assets under management, and more than 1100 employees in 30 locations throughout the country and in London. Of expertise in investment management, investment services, insurance services, investment banking, consulting and Real Estate, Mesirow Financial strives to meet the financial needs of institutions, public organizations, corporations and individuals, and was named one of Chicago in the best places to work in Crain Business in Chicago in 2008. For the fiscal year ended March 31, 2008, the company posted $ 490 million in revenue (unaudited), with more than $ 245 million in capital.