RE:Buy or wait?Great questions!!
A number of months ago, I talked about how I saw the price of oil moving back to the marginal cost of production and based on the full cost (production plus social) for the Saudis, I saw that number as being somewhere in the mid 80s. We are now approaching that number on WTI.
Recently I bought a small underweight position in SU with a view that I would increase that position if the price of oil continued to go down.
My views concerning the overall economic situation and in particular whether there will be a recession or not are well documented here and I won't go over that again here in this post.
Opposing the threat of demand destruction in a recession is the oil supply situation that has been well documented here by Migraine (thanks my friend).
On top of all that is the US political situation of being just a few months away from what could be a conequential mid term election in that it is likely that the Republicans will gain the House - the Senate IMO is still up for grabs IMO. Either way both parties will be represented - The Democrats in the Executive Branch (President) and the Republicans in the Legislative Branch and the Republicans in the Judicial Branch. In essence this, given the current state of play in US politics means that nothing will get done of substance until after the presidential election in 2024 and that includes a more favourable energy policy.
So when I put this all together, I come out with an oil price scenario where it is possible to see a lower oil price from current levels, possibly down to the low 80s and if the recession is deep or prolonged possibly into the mid 70s. If prices do fall to these lower levels, I do believe that the evidence supplied by Migraine would suggest that there would be a strong rebound in oil prices particularly once it becomes apparrent that the recession is coming to an end.
The conclusion that comes from this steam of consciousness???...lol
It is still better to hedge one's bets but the fact that oil prices are closer to the marginal cost of production means that it worth buying more oil stocks albeit while continuing to be underweight but less so.