Yes, we've talked about this before.
The long-term outlook is pretty clear to everyone. But the subject is the near-term outlook, and what factors are influencing price: what's the call?
It reads:
[1] - inventories at 5-year highs, and that's not even counting offshore storage.
[2] - those who ship oil and refine it are pulling back - shippers and refiners are getting hammered. They are a good predictor.
[3] - relevant predictors are also negative - capacity utilization, employment, etc. in all major industrialized countries.
[4] - separately EIA, IEA and OPEC also predict depressed demand, even into 2010.
[5] - OPEC has increased pumping, and compliance has slipped to 72%
[6] - curbs on speculation should be in by Xmas.
[7] - at seasonal highs in demand, inventories are still growing
Summary: near-term, oil should dip.
However, low tanker rates are good for revival of the contango trade, and until the trade turns against them, speculators will probably stay in the game. The game has been going on for so long that it's hard to say when it will fold. There's room for almost +100 million barrels in empty tankers, though rates will climb as storage grows - it becomes riskier.
Long-term, crude's just going to get more expensive. When the supply crunch hits, it's going to rocket. We all agree.
But right now, short-term, I'm betting against crude. This isn't going to be a V-shaped recovery, not a chance.
Jim |
