Who let the bulls out?

Who let the bulls out? The energy complex exploded on the explosion in Britain’s 5th largest oil depot. Oh sure, the cold weather played a part and the Department of Energy raised its long term oil forecast significantly. But it was the explosion in Britain that more than likely provided much of the fireworks. Traders realized that US oil consumption is being supported by record imports. Imports that will be less available as the pool just shrunk due to the Britain situation and the possibility that they’ll now have to import more oil. More oil to Britain means less to the US and so goes the market to the stratosphere.

Yesterday’s rally also had a certain amount of long term thinking involved. The Conoco-Phillips deal to buy Burlington helped spur a rally in natural gas as traders started to think about what kind of statement this makes about the long-term outlook for natural gas. It is obvious that this mega deal is a bold statement by Conoco that natural gas prices are going to stay high for sometime to come.
…This Department of Energy enlightenment about Mid East capabilities has all the peak oil guys saying, “Ah-ha!”. Now we finally have the proof that the Middle East is running out of oil. They are also probably saying that with oil prices close to $60.00 a barrel, these countries should be dying to spend some of those petro dollars by expanding their abilities in order to make even more money and gain even more clout with their oil. And don’t forget the greed factor. As many say, it is well known that Middle East oil producers are just greedy. Matt Simmons has raised questions for example about Saudi Arabia’s ability to increase oil production in the first place. Others, like Cambridge, also believe that we are no where near peak oil.

But maybe the reason that oil producers in the Middle East are not rushing to bring more capacity on line is that maybe they have learned to gain an appreciation for the big picture. Maybe its possible that Mid East producers have lived through enough of the boom and bust cycles in oil and maybe they are not as quick to jump on the first price spike to come along and raise capacity. Maybe OPEC and other countries are treating their natural resources as a business. Maybe they have learned from the mistakes of the past just like the big oil companies who have also been slow to increase capacity.

FXStreet.com