Duude

The Real Rationale Behind Current Supply and Demand for Oil and Other Commodities

While the world economy was running on all twelve cylinders, ready and available oil was just about, or even a little under world demand. This made for an environment where any news about disruption of supply such as rebels attacking a pipeline in Nigeria, or an oil terminal fire in Saudi Arabia would cause a shock in prices at the commodity exchange. This all had a very bullish bias in pricing. Oil speculation had the effect of pushing prices up to what I would call a reasonably worse case scenario in supply. That means only a minor cutoff in supply where demand is already quite high can result in incredibly inflated prices. We are now experiencing the reversal. With world demand considerably lower and full tankers playing storage, we're awash in oil. OPEC will not see $75 anytime soon. They don't have the ability to cut as much as they need. Only a few countries can afford to cut---Saudi Arabia, Kuwait, perhaps UAE. The remaining countries will promise to cut but will not. This is their history. They're are liars and cheats and nothing will change. The world economy is the only thing between them and $75 oil.