The Oily Rollercoaster

[Oleander Ardens]

Well I speculated in oil around 120, because I thought we would see a sharp comback before the recession kicks in. That after I was bearish about oil early in 2008 because I forcasted a recession back then. One of my few mistakes lately, fortunatly.

OPEC will now try to stop the fall of oil, we will see if they are capable off. On the one side the fall of oil is a godsend/marketsend in this recession. But it will seriously hamper many investements, because companies will think that they won't be profitable in the long term. Especially if the cost of credit is so high, if you get one. Critical here is the investment in oil refineries. Sigurd already made the point about delivering the refined product to the market.

Personal outlook:

As demand has slown down in the USA and to a lesser extent in Europe, and the increase of it in China and India we can assume that in a matter of year roughly 5-7% of the world's forecasted demand has been cut. This reduction accounted for a roughly 50% drop in oil prices. With an ever increasing number of individuals who consume a ever greater amount of oil, and the peculiar situation of the dollar (huge deficit and so on) oil prices will potentially increase greatly in the future. Throw in the investment crunch in the industry and the supply side is not so rosy long term. I'm starting to feel bullish about oil, even if think it can still go down 10-15$.

BTW: Just found a good article about the oily issue

OA