WTI pushing toward a 45 handle this morning. Maybe we're going to see a run at the 44ish support here sometime.
In my view that is a near certainty sometime soon unless production is cut and the only thing that's going to do that quickly is a geopolitical flare up.
My tech view is that we had a near perfect bounce off the 30 year uptrend line that I'd previously noted. If you run that you have what is known as a Hooker formation, no visible means of support. I guess you look next to the old 2008 low around 30 next.
I've kind of modified my previous views about buying some oil assets if there is a real washout. First, there's going to be a couple billion barrels in storage so even if we had a 10 m/b/d shortfall (Saudi Arabia or Russia fall off the earth) there is 200 days of buffer. There will be a long overhang from this, particularly if you're only working it down at a couple m/b/d.
So maybe someday but the overall stockmarket is also richly valued and I'm guessing won't fully discount those assets quickly.
And anyway, it there are sweet deals the private equity and hedge fund guys are going to keep them for themselves.
The purpose of discussiong this in this venue is what I've said- expect most commodities to underperform their apparent fundamental values in this environment.
