Shutterstock photo
Markets

Oil Update – Two Things Going On Here

Shutterstock photo

Shutterstock photo

Brent up another 3% today. Not only did the market over-react on U.S. oil supply issues not a demand based fall in prices that people that only now are some grudgingly admitting but on the downside.

oil_barrel_1

What do you do into the June OPEC meeting? What happens when they cut? Supply disruption issues remain out there globally despite the fundamentally over-supplied current state. The world will still consume 94m barrels of oil next year and probably 100m by 2018.

This is indeed a U.S. supply side story with oil ( USO , quote ), despite the potential Iran online and thus the WTI / Brent spread has jumped 8.50 in month and it looks like in may in fact breakout to one and two year highs by summer.

Do you really think the U.S. driver, who is almost 25% of global demand will not be driving a lot more once we hit peak driving season, if gas prices stay at $2.50/gallon? Lower prices spur demand which in turn requires and investment into production...I digress.

Chart_ LCOc1

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks