The August WTI Crude contract closed at $141.35/barrel today. I beleive that in the short term, oil might briefly touch $150/barrel just cause the $150/barrel mark is a major milestone and psycholigcal barrier however, regardless of whether or not the oil price touches $150/barrel in the short term, I think the next $20 to $25 move in oil will be to the downside. Ideally this should not affect oil stocks as most oil stocks are trading as if the long term crude price will remain at $90 to $95/barrel but if (and when) the oil price corrects $20 to $25 from its current level (of $141.35/barrel), it will drag down with it the share prices of a number of oil companies because markets do not always behave in rational ways. At that time, I hope to be loading up on my favorite oil companies because I beleive in Peak Oil Theory.
The Oil Story Via Charts
The following charts should depict the fundamentals for a multi year bull run in the oil price (keep in mind: there will be short term price corrections but I beleive the trend will reamin upward for many years to come). Charts courtesy the BP Statistical Review of World Energy 2008, Exxon Energy Outlook and US Funds "Where is the Boom and the Doom Presentation".
Quick Overview of the Oil Market
Forecast for World Energy Demand to 2030
Primary Energy Supplies
2007 Oil Consumption Per Capital (tonnes)
Oil - Proved Reserves at the end of 2007 (in thousand million barrels)
Oil - Global Refinery Utilization
S&P 500 Energy Weightings - Unchanged in 10 years
|