Saturday, December 1, 2012

"Analyst Makes Bombshell Prediction Of $50 Oil"

I would worry about this if I was long oil,

"With profitability for US domestic oil producers very high and no change in sight to US rules preventing crude oil exports, we expect WTI prices to continue to lag international prices. Indeed, we see a risk of WTI temporarily falling to $50/bbl over the next 24 months to force a slowdown in supply growth or a change in crude oil export rules."
One interesting thing is that if there is an oil glut/bust while natural gas is beginning to rally, that would actually be more bullish for gas, because the production of associated gas from oil wells would fall.

Now, some of the worldwide oil glut projections seem a bit optimistic. But I would want to be agnostic on the price of oil.

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