JREwing

U.S. Recovery Could Push Oil Much Higher

dilton_dalton a little market 101.

The market anticipates higher demand and tighter supply. That's why oil prices are rising. When would you like oil prices to go up? When there is one day of supply left?? When you check out the supply data on the EIA website, you can see that there are around 16 million barrels less supply then last year at this time, overall. In Cushing Oklahoma, which is crucial for the price of WTI, supplies declined by a third compared to last year.

See for yourself here:
tonto.eia.doe.gov/oog/...

Other sorts of crude are not as expensive. These are sour sorts(Iran, Saudi Arabia, Venezuela), which more difficult to refine. They have less pricing power.

check this link:
www.bloomberg.com/apps...

Simple fact is: Oil is harder to find, particularly the good stuff.

If it makes you feel any better. It's not just oil.

Take copper for example: Like with oil, it takes years for new capacity to come online. And the good mines are mostly depleted. When you operate a mine with lower grades, you have to extract more material for the same amount of copper. So it costs more. If the market doesn't pay it, it wont be mined. It's as simple as that.

All in all, I think oil is cheap. Think about it: It is the lifeblood of western civilization. With out it we are back in the 1870s. You can't even bring people to a hospital without it. You can't get food on your table. For every calorie of food we spent 10 calories of oil equivalent. You can't take a warm shower.

I think 300 $ would not be outrageous.