Did something happen?
Where are all the people that two weeks ago said $85? The people that are saying $55 today, where were they two weeks ago?
This is amusing.
My take has been the same for a while. Demand is growing faster than supply. This is not a one month or even a 2006 thing. This has been changing slowly and will continue to change, slowly, over the next few years. Something could happen to allow supply to keep up but that is not happening yet nor is there visibility for that.
My thoughts about price changed a little recently. For a long time I thought we would be unlikely to spend a lot of time below $60. Now I am thinking $65 makes more sense. Here I am saying if we go below that level I think it will only be for a very short time.
Bringing in portfolio construction to the conversation, while I have unyielding faith in the theme I do not have 30% in energy. Not even 15%. Energy has provided plenty of lift overall without having a huge overweight.
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8 comments:
Interesting speculation from John Mugarian http://tinyurl.com/jf76k
I'd still be surprised to see $55/bbl oil by Fall and seriously doubt it could stay there long much less have any impact on the US economic situation by November given how long it takes the price of crude to actually work though the system but otherwise, who knows, it's a strange world out there.
Heard this past weekend that there was so much oil being pumped out that there is now no where to store it all, that the cost of "oil storage" has gone sky high...
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Nice blog. I added a link.
Don't know about $55 but looks like it could fall back a bit...
As long as there aren't many serious hurricanes and once it becomes apparent that the US is headed into recession if it is.
I dunno, does a recession really bite into oil demand all that much? I guess some is used in chemicals and the like. But if the economy is going to slow people will stop driving? You pretty much have to drive to get anywhere in the US. I guess if we're all unemployed and living under a bridge we won't be driving much.
Plus China, India, etc.
(Not that oil stocks won't be brutally sold off from time to time).
Roger,
I just sent you an email from the Wall Street Journal that contains some interesting thoughts about oil.
JLP
AllFinancialMatters
Expect a correction in oil prices thru 2007. The latest OPEC world oil report estimates that world demand will increase from 84.5 mbd in '06 to 85.8 mbd in '07. Production in non-OPEC states will outpace demand, rising from 55.4 mbd to 57.5 mbd over the same period. The biggest contributor is increased production in the former Soviet "-stan" states, and these fields aren't slated to peak until after 2010.
Haha. Here it is April 16, 2008 and oil hit $115 barrell. Sure makes you guys look silly
odd comment; the general tone of the original post was for higher prices, the tone of the previous comments, save for one, seems to think prices were going up.
why are we silly?
i'll just assume you just made a typo and actually know how to spell barrel.
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