igggy

Crude Oil, OPEC and Super Contango

To all the 'experts' out there, correct me if I am wrong but wasn't there an article in the Economist around 98-99 prediction single-digit oil for the next decade. At the time oil was trading at $15 or so.

I agree with the author. Given the world-wide economic decline that's bound to get worse before it gets better, oil can only go down. Oil producers will have to cut costs, reduce exploration budgets, and possibly pump more to pay for the fixed costs. Eventually, some will completely shutdown (like the Oklahoma/Texas wells in late 90s) and then oil will start going up again - in 10-20 years perhaps.

Poor Oil Demand Meets Excess Supply; Prices Should Drop

Natural gas seems to be a great alternative to oil especially in the US. I can't wait to switch from an oil furnace to a gas one once we have a gas line put in. People seem to forget that there are alternatives to oil in most applications. Plus, the new EPA standards will start making an impact on gas consumption.

I am bearish on oil for the next 5-10 years. I think it's all 'thesis' trading right now. Green shoots, weak dollar, China, blah, blah, blah. I think the picture will change dramatically by the end of the year and we'll be looking for a 'safe haven' again.