Oil, Still Oversold
Today we face many economic obstacles; the obvious ones are quite evident. From frozen credit markets and unemployment to the auto industry and housing, there is no shortage of problems. While the world grapples with these issues, we believe the market is underweighting a potential oil supply-crunch that could reignite higher prices. On the supply side, the current economic slowdown has eased significant exploration ventures.
This may cause a bottleneck, as future demand, spurred by emerging market growth, outpaces supply. Looking at the converging paths of new supply coming online and future oil field decline rates, we are lead to believe that the world’s spare oil capacity will be gone by 2011.
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