We predicted earlier that higher crude would cause forecasters to shave US GDP estimates. They have done so.
From late February we’ve had WTI (near contract then 99) at 120 but that was/is the first stop tied to Middle Eastern conflict, particularly the threat of, or an actual Iranian / Saudi shootout.
This is the reason we cautioned clients late February that it was simply foolish to be constructive (lower prices) on oil and to most certainly treat any price drop as a correction, not trend. We didn’t foresee a trashed dollar, nor change in demand, nor slim inventories.
Today analysts who apparently know a whole lot more about oil than we do, tag this strength to, sure enough, 1) a trashed dollar, 2) more demand and 3) slim inventories.
I don’t know, I guess the younger guys have passed us by. They’ve got all kinds of models showing this and that. And then one bullish analyst said today that if we get a couple of hurricanes, crude is going to the moon. Well sure, acts of God come in handy when you’re on record. But further Middle Eastern conflict and threat of blockage or interruption is not an act of the God we know; it’s instead a near certainty.
Let the dollar strengthen, let inventories bloat, let June WTI trade at 108 tomorrow (last, 112). Nothing has changed.
It remains foolish to be constructive on crude.
Robert Craven
From late February we’ve had WTI (near contract then 99) at 120 but that was/is the first stop tied to Middle Eastern conflict, particularly the threat of, or an actual Iranian / Saudi shootout.
This is the reason we cautioned clients late February that it was simply foolish to be constructive (lower prices) on oil and to most certainly treat any price drop as a correction, not trend. We didn’t foresee a trashed dollar, nor change in demand, nor slim inventories.
Today analysts who apparently know a whole lot more about oil than we do, tag this strength to, sure enough, 1) a trashed dollar, 2) more demand and 3) slim inventories.
I don’t know, I guess the younger guys have passed us by. They’ve got all kinds of models showing this and that. And then one bullish analyst said today that if we get a couple of hurricanes, crude is going to the moon. Well sure, acts of God come in handy when you’re on record. But further Middle Eastern conflict and threat of blockage or interruption is not an act of the God we know; it’s instead a near certainty.
Let the dollar strengthen, let inventories bloat, let June WTI trade at 108 tomorrow (last, 112). Nothing has changed.
It remains foolish to be constructive on crude.
Robert Craven
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