Oil and oil stocks are getting pounded today. You will no doubt read somewhere that now is the time to sell oils. This also happened a few weeks ago. In fact a new boss of mine was one of the folks making that type of call.
Over the last couple of weeks I have written that I thought oil might move closer to $60 and stay there for a while. Well, its moving there and we'll see if it stays there.
An average price of $55-$60 for a quarter will mean phenomenal earnings numbers for the sector, BP's (client holding) news notwithstanding.
I will call on Puru Saxena's nugget about per capita consumption of oil. US per capita consumption is about 25 barrels per year. China's and India's per capita consumption is less than one barrel. What do you think will happen to global demand for oil when their demand rises to 1.5 barrels per year?
Proud Member Of
Random Roger
© 2009 | Gadget Theme Blogger Template
Original WPtheme By Blogger Template | Converted By Gadget Lover
| Distributed by eFree Blogger Help
Original WPtheme By Blogger Template | Converted By Gadget Lover
| Distributed by eFree Blogger Help
5 comments:
According to my calculations demand rises by about 12%! (Assuming US stays same)
You ought to think about firing your new boss. ;)
Roger, according to the CIA Factbook, the calculations don't look good for oil. Looking at an increase of .5 barrels per capita increase in oil, that puts daily demand around 365K per day. We can't get the Saudi's to raise enough as is. This would kill the world economies if this increase were to occur. Sadly, it's very plausible.
One potential fly in the soup is that peak earnings is not typically the best time to buy a stock or a group. As far as supplying China, the chair of XON says there are 7 trillion undiscovered barrels on the planet earth.
IMHO, it will be time to sell oils and take profits when the worldwide rig count starts to go down, which is for sure not today.
Post a Comment