Short or Long Term?

The price of oil is getting hit today because Ernesto may have less impact than originally feared.

While that is good news it raises an interesting point. The trade today is about short term events. I recently read (may have been in Barron's) that China currently imports 3 million barrels of oil per day. By 2011 it is estimated that China will import more than 5 million barrels per day--that's only five years from now.

Fair enough to draw different conclusions about what this means but my take is that the long term theme is more important and these demand trends mean oil is likely to stay higher in price than what is historically normal.

This is not a call for $100 oil next year but more of a big picture concept. Demand for oil is increasing. There is some debate about supply but adding up what I read and hear I think demand is growing faster than supply.

As the China anecdote shows, this is not a call for the next few weeks. You either buy into this as a multi year idea or you don't. But if you do you need to realize that you will not get rewarded every month or every quarter. Part of successfully navigating the markets is patience and this is a case in point.