The Limits Of Oil's Rebound
We agree with Anatole on this one. As usual, the slide into summer will increase the cost of oil but only slightly, after the price will tend to drop, back into a doldrums. This is very likely to continue until one or more of the major producers finds it valuable to substantively cut production, placing supply, and demand more closely in line. Presently none of the major producer can, they need the revenue too much. In addition, Saudi Arabia cannot because it is in existential tension with Iran sussing out the Islamic Reformation, and Middle East power.
Our position remains that the long term price for oil will fall to $30 plus or minus about $5. Although we would not be surprised if oil settled in at $40, we don't expect that to happen.