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Interview: Kevin Kerr On the Commodities Pull Back

Kerr: ". . . the Middle Eastern countries - Saudi Arabia being the biggest one - could just instantly cut production. They don't want us to have more oil, they want us to have less oil."

Maybe not between now and November. Kerr's comment parallels views recently expressed by CIBC, which "cut its 2008 target for average oil prices from $125 per barrel to $115 and from $150 to $130 in 2009."

In spite of OPECs announced intent to reduce production, look for the Saudis to continue its high level of production thru the Nov. election, in its second attempt to decide a US presidential election. (The case can be made that KSA succeeded in 2004 when it produced way over quota beginning several months before the election and Bush won by a hair - - compare KSA actual production to quota, April-October 2004.) This time, they will fail due to the political fundementals (Google: lichtman + 13 keys). Even so, if I was Obama, I'd be pissed for the next 4 to 8 years.

So Kerr, Rubin and other (temporary) bears may find, when the dust settles that the avg. oil price in '08 is closer to $100 than $115. Then, in 2009, geology oil fundementals replace the geopolitical issues and oil starts its march to the Maxwell-Pickens-Simmon... $200 level. Things happen, like KSA lets its wells rest, Iraq fails to settle down, the North Sea and Mexico continue their precipitous declines, the engineers running China continue their massive capital expansion, and 2009 marks the fourth straight year of declining oil exports (Google: "Jeffrey Brown" + "Export Land Model").

More bullish views will return as it, again, separates itself from the herd. "Just my opinion, I could be wrong," but for starters watch the next eight weeks.