After all the recent discussion of oil inventories and other arguments about the price of oil I thought I would throw another set of data and thoughts on the subject. This chart compares the price of oil to the CRB Index of industrial commodity prices — an index of 13 major commodities that does not include any energy or food commodities. Both oil and the CRB are monthly average data.
Note how they move together. This CRB Index is a very good leading to concurrent index of oil prices. It regularly peaks or bottoms ahead of or concurrently with oil prices. I use the CRB as a leading indicator of world economic growth and global demand for oil and commodities. Second, note how similar the increase in oil and other commodities has been. This comparison implies that there is little or nothing unusual about oil prices this cycle compared to other major cycles. It is simply an issue of world demand out pacing supply. There is no need for any theories of hoarding or producers leaving oil in the ground or peak oil to explain the surge in oil prices this cycle.