http://www.dinocrat.com/archives/2008/04/24/some-perpective-from-a-veteran-oil-trader/ Sat, 22 Nov 2008 02:35:31 +0000 http://wordpress.org/?v=2.5.1 http://www.dinocrat.com/archives/2008/04/24/some-perpective-from-a-veteran-oil-trader/#comment-310516 Dan Lippe Tue, 13 May 2008 17:35:31 +0000 http://www.dinocrat.com/archives/2008/04/24/some-perpective-from-a-veteran-oil-trader/#comment-310516 On the contrary, crude oil supply/demand fundamentals are very bullish and are the key driver pushing crude oil prices steadily higher. Specifically, global crude oil production has been flat for three years. Growth in production from important new sources like West Africa and the Caspian Sea has been offset by production curtailments in the Middle East. Saudi Arabia, by itself, accounted for two-thirds to three-fourths of total production curtailments that began in 2006. Crude oil buyers for refineries everywhere are very aware of how little spare capacity the global market currently has and essentially all spare capacity is now concentrated in the hands of Iran and Saudi Arabia. The market correctly perceives that risks to supply are greater than at any time since the late 1970's. These are fundamental factors not speculation. Until the risk to supply diminishes (due to either declining demand or increases in production or both), supply/demand fundamentals will remain bullish for crude oil prices. We may indeed see WTI prices reach $150 per barrel this summer On the contrary, crude oil supply/demand fundamentals are very bullish and are the key driver pushing crude oil prices steadily higher. Specifically, global crude oil production has been flat for three years. Growth in production from important new sources like West Africa and the Caspian Sea has been offset by production curtailments in the Middle East. Saudi Arabia, by itself, accounted for two-thirds to three-fourths of total production curtailments that began in 2006.
Crude oil buyers for refineries everywhere are very aware of how little spare capacity the global market currently has and essentially all spare capacity is now concentrated in the hands of Iran and Saudi Arabia. The market correctly perceives that risks to supply are greater than at any time since the late 1970’s. These are fundamental factors not speculation. Until the risk to supply diminishes (due to either declining demand or increases in production or both), supply/demand fundamentals will remain bullish for crude oil prices. We may indeed see WTI prices reach $150 per barrel this summer

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