When the alts start to kick in...ie you read news that some major names are making sizable committments to alts...oil will come down...below 50... In 2006...2007...this will happen... Its going to be a real fight between the oils..alts at 50-75...the money smells good in alts if the majors are convinced prices will stay above 50.... In the past when alts started up...they were snuffed out within 18 months...this time...it just might stick to the wall...maybe...
Every 30 day period of oil above 60 a barrel adds +.10 % to the cpi/ppi numbers-----------a prolonged period above the 60 level will start a dramatic upward trend to the cpi/ppi and that will get attention. I say 70 before years end------might just be a spike but I do think it will be broken.
Growth in oil production cannot keep up with growth in oil demand. China's 9.5% GDP growth will guarantee demand will continue to rise.
Only if there's a severe decrease in demand.. That won't happen since industrial driven economies (US, China, ect) are too dependent on production which requires lots of fuel..
It's more complex than that.. The answer is Yes and no because the market supply and demand relatively thin margin.. Any disruptions cause price to rocket up.. Refining takes refinaries and there's not alot of fuel on the sideline so the supply chain requires a smooth flow to keep the price down.. Many factors drive the price up...
Weekly chart attached: Thinking the completion of W4 of W3, tho the formation does have the appearance of a H&S Reversal formation â major end of Bull move. Don't think the formation is Bear or the price will drop beyond one of the indicated Correction levels â too much demand. W5 of W3 $71, W5 of 5 $89.