10-28-2014, 09:31 AM
I think Gartman was smoking some crack yesterday.
While I do agree that natural gas is going to continue taking some of the pressure off oil, I don't think we are going back to $10 or $20 per barrel in oil as Gartman said was possible. Cold fusion has been talked about for 40+ years and we still aren't there, I wouldn't expect Lockheed-Martin to have the "holy grail" just yet.
If oil goes much lower than $75, most of the shale drilling in the U.S. slows significantly and with high decline rates, production would drop quickly in a year or less. The mess in the Middle East isn't going to end anytime soon either so I'm not too worried about them flooding the market.
I think over the next 5+ years oil will continue to vacillate between $80 and $120, with temporary periods lower or higher than that depending on world economies and geo-political concerns.
Any drop lower than that will cause production to decline and consumption to increase to bring price back into the range and on the flip side any prices higher than that will choke off world GDP growth causing consumption to fall back into line with production.
Not saying there won't be volatility along the way, but that's how I see things.
While I do agree that natural gas is going to continue taking some of the pressure off oil, I don't think we are going back to $10 or $20 per barrel in oil as Gartman said was possible. Cold fusion has been talked about for 40+ years and we still aren't there, I wouldn't expect Lockheed-Martin to have the "holy grail" just yet.
If oil goes much lower than $75, most of the shale drilling in the U.S. slows significantly and with high decline rates, production would drop quickly in a year or less. The mess in the Middle East isn't going to end anytime soon either so I'm not too worried about them flooding the market.
I think over the next 5+ years oil will continue to vacillate between $80 and $120, with temporary periods lower or higher than that depending on world economies and geo-political concerns.
Any drop lower than that will cause production to decline and consumption to increase to bring price back into the range and on the flip side any prices higher than that will choke off world GDP growth causing consumption to fall back into line with production.
Not saying there won't be volatility along the way, but that's how I see things.