Monday, February 14, 2011
$104
The price of a barrel of Brent oil is well over $100 now even though WTI is still trading at $90 for the same month futures. This the highest price ever for this time of year, including 2008. There has been a decade long secular bull market in commodities, Bazooka has only squirted lighter fluid on top of the flame. Technology and services are being devalued and raw materials are being revalued. One is increasing in supply, the other is not. When you see no supply response to higher prices, it means everyone is already pumping / planting / mining at max production.
Subscribe to:
Post Comments (Atom)
Posts
2 comments:
Check your facts. Excess capacity is more than double 2008. And so are inventories.
This is merely speculation.
Inventories don't mean anything. Its a drop in the bucket to how much is in the ground. Its about how much production is occuring at these prices. And spare capacity is hard to measure because everyone but the Saudis are pumping out at max capacity, but they won't tell everyone how much spare capacity they have.
Even the Saudis don't want to see oil stay over $100 because it will cause a rush towards alternatives but they don't have enough production capacity to really stop it.
Post a Comment