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There is something I don't understand, and you may not be able to explain, but... I woke up this morning, turned on Bloomberg news, and the first thing I saw was that oil was down again. Then the commentators said the world is awash in oil, China is slowing, yada, yada, yada. All your arguments make perfect sense, so why on earth do these speculators and talking heads not see what you see?
Re: ???
It is hard to explain why the media does not realize that increasing demand (the IEA report says demand will go up 1.2 million barrels per day this year) combined with falling supply will cause the price of oil to eventually go back up.
Raymond James & Associates in their January 4, 2015 Energy Industry Brief said, “As before, “the solution to low oil prices is low oil prices.” While it may take a couple of quarters to play out, we see clear evidence that global oil demand is already responding (to low oil prices), and global oil supply is poised to slow enough to leave the market substantially undersupplied by the end of 2016, lasting through 2018.” Raymond James has increased their 4th quarter forecast for WTI oil to $65.00 per barrel.
Raymond James & Associates in their January 4, 2015 Energy Industry Brief said, “As before, “the solution to low oil prices is low oil prices.” While it may take a couple of quarters to play out, we see clear evidence that global oil demand is already responding (to low oil prices), and global oil supply is poised to slow enough to leave the market substantially undersupplied by the end of 2016, lasting through 2018.” Raymond James has increased their 4th quarter forecast for WTI oil to $65.00 per barrel.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: ???
On January 19th, here is what Michael Rothman at Cornerstone Analytics had to say about the IEA report:
* Non-OPEC production year/year was down during December, which correctly dispels the consensus forecast for production to grow during the month.
* On the Iran front, the IEA expects an eventual rise in production of just 300,000 b/d – this figure is well below general market expectations and in-line with my forecast.
* With regard to global inventories, the pace of stocking slowed dramatically after July, a finding that is lost on many and refutes the consensus argument that the market is oversupplied by 2 million barrels/day.
* OPEC production fell slightly during December, led by a drop in Saudi, which has seen production fall by 400,000 b/d since July.
* Bottom line: while oil prices continue to be beaten down by an extremely bearish consensus, oil fundamentals suggest the global supply/demand balances are tightening.
* Non-OPEC production year/year was down during December, which correctly dispels the consensus forecast for production to grow during the month.
* On the Iran front, the IEA expects an eventual rise in production of just 300,000 b/d – this figure is well below general market expectations and in-line with my forecast.
* With regard to global inventories, the pace of stocking slowed dramatically after July, a finding that is lost on many and refutes the consensus argument that the market is oversupplied by 2 million barrels/day.
* OPEC production fell slightly during December, led by a drop in Saudi, which has seen production fall by 400,000 b/d since July.
* Bottom line: while oil prices continue to be beaten down by an extremely bearish consensus, oil fundamentals suggest the global supply/demand balances are tightening.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group