Silver lining: Commodities prices decline sharply

As disappointing as the reaction to the death of The Big Bailout Bill was, there was a nice silver lining to that dark cloud as commodities, notably crude oil and gasoline, fell very sharply. Crude oil is back under $100 and wholesale gasoline futures fell by 28 cents. The October RBOB unleaded gasoline futures fell over 10% to $2.3840, which implies a retail price of $2.98 to $3.03 per gallon, which is over 60 cents below the current AAA national average. It may take a few weeks for consumers and businesses to see these declines in their wallets and pocketbooks, but they are on the way.

I think part of the decline in commodities is caused by hedge funds facing redemptions and banks needing to raise more liquid capital.

Maybe we really are finally passing the tipping point for commodities speculation, the point when hedge funds and the proprietary in-house trading desks at banks can no longer throw vast piles of cash at commodities with wild abandon.

-- Jack Krupansky