RE:Bullish Oil Fundamentals, and what could Derail it Thanks for that Migraine. useful perspective to say the least.
While there is a lot to say about the underpinnings of their scenario, for the sake of argument, let's say they are right about oil going to 90 a barrel by yearend.
If that were to happen then we would see a resurgence of inflation driven by the higher oil prices and another round of interest rate hikes. In the case of the US this would drive my base case assumption of 5.5-6% for the discount rate that I talked about many months ago well into the 6s and possibly as high as 7%. Such an event would guarantee a recession. A recession would in turn create a downdraft in oil prices.
Since you are highly levered in your investment strategy such a scenario would likely result in another year of 7 digit gains for you. For mere mortals, many oil investors could lose their shirts.