Great charts deplict expectations for GDP and Employment numbers for various Oil Prices thru 2013 and potential price spikes caused by interruption in supply. Article a little dated but great.
Vanguard says not necessary to panic at every world- ending oil event (they usually are transitory)-- but expect higher prices ahead. Unlike many others (present company excluded) Vanguard has extreme high credibility with no axe to grind other than best interests of its millions of investors. There macro research is great IMO.
https://personal.vanguard.com/us/insigh ... t-04192011
(Simply hold down mouse and drag it over the address above; then click right side of mouse; select 'copy', then click on address bar above to paste article to your browser-- no need to type in the entire address. Final step--hit enter..... and you're on your way.
Vanguard's take:Oil Prices vs GDP/Employment
Vanguard's take:Oil Prices vs GDP/Employment
Last edited by garyaz1 on Thu Jun 09, 2011 11:41 pm, edited 1 time in total.
Re: Vanguard's take:Oil Prices vs GDP/Employment
Vanguard: "Our calculations suggest that crude oil prices would likely need to persist at $150 per barrel to generate a U.S. recession, although even $120 per barrel would likely engender a weaker-than-expected recovery, or 'soft patch,' later this year," Mr. Davis said.
My take is that oil will flop around in the $95 to $105 range for a couple months. There is very strong support at $96/bbl. There is now softer support at $100/bbl. WTI has closed for the last five Fridays in a very tight range of $99 to $101. A close above $102 on Friday would be bullish.
By this fall, I'm expecting oil supply / demand fundamentals to tighten and oil will trend up to about $120/bbl by year-end.
Keep in mind that we are talking about West Texas Intermediate (WTI), the price quoted in the headlines each day. Other crudes like Brent, Louisiana Sweet and Alaskan North Slope will continue to get a $10-$15 premium. All imported oil is coming in at much higher prices than you read in the paper. The discount on WTI is being caused by the bottleneck at Cushing, OK. The bottleneck will not be resolved in the next 18 months.
> GPOR is selling 85% of their oil into the Louisiana market at a $15/bbl premium to WTI. They are going to report very strong 2nd quarter results because of this fact.
> DNR selling 40% of their oil at this premium.
> EXXI sell 100% at the premium prices.
My take is that oil will flop around in the $95 to $105 range for a couple months. There is very strong support at $96/bbl. There is now softer support at $100/bbl. WTI has closed for the last five Fridays in a very tight range of $99 to $101. A close above $102 on Friday would be bullish.
By this fall, I'm expecting oil supply / demand fundamentals to tighten and oil will trend up to about $120/bbl by year-end.
Keep in mind that we are talking about West Texas Intermediate (WTI), the price quoted in the headlines each day. Other crudes like Brent, Louisiana Sweet and Alaskan North Slope will continue to get a $10-$15 premium. All imported oil is coming in at much higher prices than you read in the paper. The discount on WTI is being caused by the bottleneck at Cushing, OK. The bottleneck will not be resolved in the next 18 months.
> GPOR is selling 85% of their oil into the Louisiana market at a $15/bbl premium to WTI. They are going to report very strong 2nd quarter results because of this fact.
> DNR selling 40% of their oil at this premium.
> EXXI sell 100% at the premium prices.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group