cut and paste from a site that is not open to the public
FWIW, here's a C&P that has a slightly different take on the current price of Oil. this site is really focused on input commodity's but I do see a lot of questions about Oil and feel compelled to comment. For those that are trying to find some support for oil and maybe some of the other input commodities that have been crushed....The entire move from 100 to 65 is essentially a supply side shock. More supply from the US not offset by production management from OPEC. Those looking to buy value at today's prices are asking how soon the supply response will be to build price/value support (imo this is easily quarters, not months). However the REAL question is, if you are a believer in the main thesis that is discussed on your site (most of the global gdp growth is illusory due to massive money printing), then what happens to the commodity complex once the DEMAND curve gets hit? Buying commodities that are highly correlated (and is there any that are more correlated than oil?) to GDP growth seems a tough one. I have worked in the oil sands business for a long time and I can tell you our current discussions internally and with our board are solely directed at what can be cut, how firm are our lines and what else can be done to hunker down and weather the storm. If you look to mid to late 80's oil (and many commodities) traded below the marginal cost of supply for YEARS. Economics tells you that cant last, but it can sure last longer than most think - just look at the gold miners this last two years for a recent example......bottom picking gdp based commodities here might be a bit dicey