Goehring & Rozencwajg Report
"Our models tell us that global inventories will continue to draw and we run the risk of a huge upward move in prices starting right now” according to a report by Goehring & Rozencwajg. “We are being presented with the buying opportunity of a lifetime” in the energy sector.
“Global oil inventories continue to draw rapidly and we have now reached the point where further drawdowns will put severe upward pressure on prices. Oil production from the US shales has slowed significantly in the last six months . . . Despite continued rampant bearishness, global oil demand continues to significantly exceed supply and global inventories are now drawing at record rates.”
“As Chart 1 vividly shows, we are now drawing down global inventories at the fastest rate ever experienced. Readers of our letters will be familiar with the drivers of this rapid drawdown: global oil demand is surging, while non-OPEC oil supply (both here in the US and abroad) is disappointing . . . the inventories have now drawn down to critical points where further inventory reductions will result in severe upward price pressure.”
When this has occurred historically oil prices “surpassed $100 per barrel”.
REPORT (CLICK HERE)
HIGHLIGHTS • Global oil supply rose by 720 kb/d in June to 97.46 mb/d as producers opened the taps. Output stood 1.2 mb/d above a year ago with non-OPEC firmly back in growth mode.
Last time, the fear was that demand was falling. This time, it is excess supply
INVESTORS could easily get confused about the impact of oil-price rises on the economy and markets. The story seemed to be clear: high prices bad, low prices good. The two great oil shocks in the 1970s were unambiguously bad for Western economies—ushering in stagflation and transferring spending power to the oil-producing countries. In turn, low oil prices in the late 1990s coincided with the dotcom boom.