Looking back and looking forward some now.
Its been a while since I started this blog, and I need to stay more current with it.
What was last years predictions? Ending the year at $70/bbl requiring some signs of recovery to hit that mark. We ended the year at $75/bbl with some signs of recovery. Im not sure we saw all the signs I anticipated - unemployment may not yet have hit its peak, and housing is still very slow. Going into the new year Oil has gone up to $80 but its been in this range for over 6 months so it doesnt mean a whole lot.
Thinking about the interactions between supply and demand and the region of $60 to $80 is the most elastic region, meaning its comfortable floating in this region with a small amount of excess capacity. To go much higher we need to get the impression that growth is returning and the excess capacity we have will not be enough. Thats easily possible this year of the credit/housing/employment picture improves.
I have decided to sell the motorcycle I bought. It just isnt economically viable once insurance and maintanence costs are factored in. To justify those expenses gas needs to be $8/gal - I wont ride in cold or wet weather either so that was a limiting factor.
So what to expect in 2010? Well Honestly I havnt kept my nose to the data latley, my gut tells me to expect to see $90/bbl in the first half of 2010 as the economy makes noises about recovery - OPEC meetings where production increases are discussed - who knows what they will do. I half expect them to hold it steady (and enjoy the prices) but they may open the taps a little making some noises about not wanting to hurt the recovery. But then Im sure the world will be shocked when "opening the taps" doesnt really add much to the supply side.
We shall see.