From an E&P CEO:
the Saudis want to chill investment in new oil supply to help protect OPEC’s future. In round numbers we have had about 5 MBOPD increase in world oil demand over the last 5 or 6 years. Over the same time period US oil production has grown from nearly 4 MBOPD (from 5 to 9 MBOPD) — 80% of the increase in WORLD demand!
This is NOT good for OPEC. I suspect that we will have ugly oil prices ($60 – $75) for around a year as that is long enough to stop many current oil supply investments and, more importantly, serve to chill the appetite for future large investments in oil supply growth (deep water, arctic, marginal shale, marginal tar sands, etc) which is the Saudi goal in my opinion. I do not believe that the current price ($65) is a sustainable price going forward. It would not encourage enough new supply
This seems plausible enough, and if true, might have seemed even elegant in the planning, since it kills or wounds three birds with one stone (Iran needs $136 oil to balance its budget, Russia $100). But that was then and this is now, and things seem to have spun out of control. All of which led us to Cramer’s discussion of what the charts are telling us about the future price of oil.
Suddenly a word appeared that we had not heard in a long time — Cramer said that trading often forms Fibonacci sequences. Fibonacci? Huh? Suddenly it’s everywhere. We couldn’t find our copy of Vincent Scully’s book, but sure enough, the Golden ratio is right there at the Parthenon. Jeepers. (Ancient Greeks? — watch out AS!)