Big Red Car here. Got a new set of tires this weekend and getting a new water pump today. Want a new paint job. Bad. Need one.
Tell The Boss to paint me. SOB is cheap.
So The Boss says to keep your eye on oil. Why?
Oil prices have taken a big dip in the last year and in the last month, in particular. Here’s a chart for West Texas Intermediate (WTI) crude. Wow!
We were looking at almost $95.00/barrel a year ago and now it is in the mid-40s. That is a big decline.
Current production is increasing and the prospect of Iran coming back to the market sanctions free will add as much as a million barrels per day — 1,000,000 barrels per day!
Here is a good article which discusses some of the most important considerations in detail. Read it.
Oil Article from International Energy Agency — READ ME
To summarize here are the dynamics:
Oil production, including in the US, is up to record levels. This includes OPEC. Big time!
Oil demand is projected to decline in 2016.
Oil stockpiles are at all time highs.
Iran may shortly be back in the market with another 1,000,000 barrels a day. Here is a good article quoting Iranian oil minister Bijan Namdar Zanganeh saying just that.
Bloomberg Business article — READ ME
Supply up. Demand down. Inventories full. Prices have to continue a downward trend. The big question may be — why hasn’t it declined more?
One answer to that question may be that it is summer and Americans (largest gasoline market in the world) love a road trip. Love a road trip! Come Labor Day, look out. That’s a month away when Longhorn football starts again.
Keep your eye on oil prices as this could really have a favorable impact on the US economy. Keep your eye on oil.
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car. Be good to yourself. You’ve earned it.
