User 305589

Oil: A Slippery Slope Ahead?

andrew, oil may have been in a bubble - but certainly nowhere near that one in real estate, treasuries, dot-com stocks etc. marginal producers need about $70-$80 to replace a barrel of oil and that is going to be the new metric going forward. there is a supply glut currently, yes, but without underpinning it with data you make it a multi-year-hard-to-wor... go figure, at 86mln barrels/day of world consumption those 10 or 20 million stored barrels do not make a dent for any extended period of time.

second, you are plain wrong stating that oil stocks were priced for a near-term rebound. give me a break! most of them are priced for oil at $ 40 forever and more than a handful of them are priced as if they would go out of business over the next few years.
what has caused the sharply falling oil price was the liquidation in paper oil contracts and this is mostly behind us. as you correctly noted, everybody and his hedgefund were long oil half a year ago. 6-12 months from now, these speculative investments will have been liquidated entirely and then demand-supply will take over in EARNEST!

you acknowledge the long term danger of a severe supply crunch in oil but you think of a very very very long road till there. imho, that fits the definition of complacency quite well: danger ahead, yes, but very faaar out. don't worry there will be plenty of time to deal with it. wrong it won't be. it's a golden window of opportunitiy for the US of A to do something serious about their oil consumption and future oil supply.
2-3 years from now at the latest that window will shut down. for a very very very long time