Understanding crude prices today is not the domain of the economist, nor he who has knowledge of reserves, tankage or inventory levels. It is the domain of the social scientist.
Most have come to acknowledge what is now termed the Arab Spring but they may not have adjusted to the further risk of violence which will accompany that adjustment.
Our clients were warned late Feb, early March that the course-of-least resistance in crude would be higher over the intermediate term, with 120/125 WTI the high side risk.
That is, 1) higher over the intermediate term because of the dynamics of the region and 2) the high-side risk of 120/125 because of Iranian / Saudi tension.
We advised then that any improvement in crude prices (lower) was to be taken as a correction, not trend. That unfortunately has proven to be correct.
Today’s quake in Japan, better world economy, demand “outstripping supply,” the Libya shut down, all seem to conveniently play a part. Yet it is general unrest in the Mid East which will keep crude prices under pressure. It is the event of Iranian / Saudi armed conflict which will print our target.
Robert Craven
Most have come to acknowledge what is now termed the Arab Spring but they may not have adjusted to the further risk of violence which will accompany that adjustment.
Our clients were warned late Feb, early March that the course-of-least resistance in crude would be higher over the intermediate term, with 120/125 WTI the high side risk.
That is, 1) higher over the intermediate term because of the dynamics of the region and 2) the high-side risk of 120/125 because of Iranian / Saudi tension.
We advised then that any improvement in crude prices (lower) was to be taken as a correction, not trend. That unfortunately has proven to be correct.
Today’s quake in Japan, better world economy, demand “outstripping supply,” the Libya shut down, all seem to conveniently play a part. Yet it is general unrest in the Mid East which will keep crude prices under pressure. It is the event of Iranian / Saudi armed conflict which will print our target.
Robert Craven
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