Oil theory: Venezuelans, Saudi, and others have a long history of breaking agreements, cheating...."getting greedy"......there is still enormous reserves out there....and Iraq, Russia are no where near full production...indeed, the odds are very good that we will see more Iraqui supply (not less) in the coming years...it is their most tradeable, hard currency option...
I am assuming (could be right, could be wrong) that demand levels in Asia, Europe will remain light until at least 2000, and probably beyond......and that Asia's overall recovery will take much longer...and that Asia (especially Japan's) recovery will be a weak one..not putting much pressure on demand..
As well, I see Europe having a weak recovery beginning the end of 1999, and lasting thru 1st half of 2000...again, demand for oil will not dramatically rise..
I think U.S. growth will be good in the next 6-9 months (2-3%), but weaker...this will mean less demand, as well..
Oil has rallied 70% off of the lows...that is more than a recovery rally, IMO, and is assuming a lot........it will go down before it goes up.....
I just don't have any long-term confidence in OPEC, and OPEC-friendly countries in toeing the line....I AM surprised that they were able to put thru the last round of cuts...although I expect to hear (within a couple months) that someone is cheating....Situation in Venezuela right now, for example, is extremely bad..and they are a likely candidate... |
