Out of lurk mode...
"since they will still be needed even in a downturn or in an inflation environment, and as stockpiles dwindle due to cut production, and as it gets more expensive and difficult to open new sources, commodities will continue to do well into the future."
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Oil has the same pluses. In addition to the fact that present low prices restrict investment in new supply, there will be active efforts to restrict/reduce existing supply. Acknowledged there are lags, and OPEC has difficulty maintaining compliance, but still... in this case the market doesn't have to "grow" into supply, the suppliers will cut back until prices start to rise again. It may take a year, maybe less.
Emerging markets have added millions of new oil users; the coming downturn will moderate demand, but it will still be up, not down from a decade ago.
Finally, I think there will be efforts to restrict the kind of speculation that drove prices far past demand, to $147/bbl. Hedge funds will get their wings clipped. Nevertheless long-term, oil should be fast out the gate when the time comes.
Even in a global recession.
JMO. Back to lurking.
Jim |
