Yergin has been an avid follower of the oil markets for decades. For those that aren't aware of who Daniel Yergin is, he's a Pulitzer Price-winning American author and a co-founder of the Cambridge Energy Research Associates (now part of IHS). He was one of the few economists to come out and attack the peak oil theory noting that there have been multiple times in the past people were concerned about the idea of running out of cheap oil.
Given the level of magnitude in this downturn and what technological advances have been achieved since the 07-08 period, it's safe to say that Yergin has been right on his prediction. As part of IHS, Yergin is widely followed in the energy community and a highly regarded "expert".
In a conference in Norway, Bloomberg reports that Yergin believes the worst is over.
He also noted that once the market "balances," the next challenge will be to work off the excess supplies in storage. In light of the OPEC meeting this month, he notes that production capped at current levels won't do much to balance supply and demand.
We are in agreement here with Daniel Yergin. There are definitely a few more wildcard in this overall mix that he's leaving out, but supply is certainly decreasing. Venezuela, which will be covered in our OMD tomorrow, continues to see political unrest. In July, Venezuela produced nearly 2 million b/d, so any prolonged outages there would see a significant impact on global supplies.
As the oil (NYSEARCA:USO) markets move through the rebalancing phase, we could see continued volatility. September should prove to be an exciting month for traders as headline risks will provide positive price movements, while additional slowdowns in refinery throughput could see downward pressure on prices.
What do you think about Daniel Yergin's comments on the oil markets? Let us know in the comment section below!
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