Some early signs for 2008
It is sometimes amazing how fast things can change.
Looking at the last calls in 2007, the world was heading to an oil price of 100 dollars per barrel. Even only touching it shortly, and at the behest of a speculator wanting to be famous, it looked like it was only a matter of time before we would have a consistent $100 oil price, heading for the $150.
Things look very different now.
With the R-word (recession) appearing now more widespread, especially in relation to the world”s largest oil consumer, the pressure on the market is receding, and so is the price. And as the problems seem only to become bigger, it may be that, in line with the expectations of OPEC, the market will be oversupplied quite soon.
As the scare scenarios are losing their credibility and quite some “Hot Spots” are seemingly cooling off, we might also expect that the “speculators-premium” will be reduced. This might help to reduce the oil price.
Of course this is good news for many but it certainly does not say we have less of a problem if we extend our horizon into the future.
The world is still faced with extensive depletion of most of the sources world-wide and delays in new projects due to
material- and skilled people-shortages. What is causing extra concern is that many of the oil-rich economies that
have seen their economies growing due to the high oil prices, are now seeing a -- sometimes very strong -- growth in
internal demand. The net result is that whilst the combined production of many of these countries is growing, the
actual export is not. This is a phenomenon that is being seen in Latin America, Africa, Russia and the Middle East;
all the main oil producing centres of the world.
So whilst we may expect an easing of the oil price to somewhat more comfortable levels in the short term, we do need
to be prepared for a tightening of the market in the longer term.
2008 will be a very interesting and exciting year.
All the best wishes still from this place,
Alexander
