Oil investment is guaranteed results

1212 2015

News Analysis .. Do you remember when «Goldman Sachs» predicted 150 to $ 200 a barrel?
What next for oil prices? If the oil market is a natural market, the answer to such a question would be very simple. We will only look at the capital cycle, and note prices in every place and time associated with the process of supply and demand. In doing so, we note that with the beginning of the boom cycle of large goods in 2002 saw demand rising rapidly in what the show was limited, which means a rapid rise in prices and profits for primary commodities sector, which has created a turn «tsunami» of capital in the sector, like of sectors even after 2008. It was at the time the conclusion that China's economic growth will be increased by
10 percent a year forever. Accordingly, China has expanded to meet the expected demand picking.
This anticipated demand has not happened, and China began to slow down in 2011, as well as the boom cycle.
In 2008, «Goldman Sachs» expectation that oil prices will reach a rate of 150 to $ 200 by 2010. Today it is at $ 40, and less than that of the barrel. Although Has anyone given the turnover in any industry before the investment will conclude that the sector was glutted supplies under the sell-off has, Vsakchw boom cycle that began to fade gradually by comments «Goldman Sachs» absurdly long time.
Even if the oil market is on the approach to the market law, we would have now seen the impact of falling prices and shrinking profitability in the paid supply to decline, as we have seen the impact of low prices to raise the demand, and thus the beginning of a new cycle means to go about buying.
However, the oil market is not systematic at all, and a large number of things that you think you know about this market is only empty talk. He talked in the past period Spencer Dale, chief economist at the Bank of England
Previously, the incumbent itself in «BP», for some of the most important myths in this market, first: «exhausted oil exporter, and the day will come and ends», note that oil demand will rise always.
Second: You may «OPEC» (or want) to control oil prices, and thus the amount of supplies to do so. The first opinion more interesting.
On one occasion it was said that oil is limited and we have reached a peak stage in the oil, and we will not find more oil, so prices will rise by 100 percent from the price at the time with the time. But in fact it is the discovery of new reserves at a time, to the extent that current reserves exceed reserves in 1980 at a rate of two times and a half time. And the idea that demand will rise now always look silly, because the control systems and anti-emissions campaign will not allow it simply.
As we can see, it has called for the Group of Seven to put an end to all uses of fossil fuels by the end of the century, while China is keen to reduce its request, because the pollution for her is like corruption, so it is very difficult to get in Beijing on the new panel-vehicle license, and that any new model in the US United binding to an average of 54 mpg by 2025.
Add to that the slowdown in China (which represents only about 45 percent of the growth in global demand for oil), and demographic changes in developed economies (where the elderly are turning toward driving less, and change the culture of the community somewhat, where it appeared the concept of participation in the car one (only 40 percent of French people have cars today, while the figure was 60 percent in 2011).
The gathering of these factors, says the president of the International Council of you manage Paul Hodges: «It's hard to imagine how the current reserves of fossil fuels will be exhausted. It is likely that fossil fuel reserves will last forever, and if we take into account this possibility that would mean that we would not expect high oil prices forever.
This takes us to talk about the offer in the short term, if we look at the theory of the top regular cycle we find money says: «If demand fell back down the display automatically». But this theory does not fit here, because OPEC is able to influence the market when it comes to short-term shocks. But for long-term shocks, such as that we are experiencing, it is not in their interest to do so. It can not wage war on the climate change and other matters pertaining to this matter the Western obsession. For example, if they are in OPEC, particularly Saudi Arabia can not stop the declines in oil prices (they are already not able to do so), why are reducing production? If they do so will reap less money in return will make more money than their competitors and the price will remain as it is.
So I will not surprise you anymore, that I heard that Saudi production has not decreased during the contraction of oil prices, but rose. Add to this, the production that comes from the United States has not declined as expected, Iran is also on its way to return to international markets after the nuclear deal, and you'll see that investors in the oil inspect their portfolios to protect them from the bad phase, which is waiting for them.
In research issued by the Bank of England, it is expected to lower commodity prices by 40 percent in the short term, which applies to oil prices.
The basic idea that should be taken into account, that successful investing is not about searching for companies riding the wave of rising demand, but in finding the waves that can ride in limited supply. This type of waves can be seen at the beginning of the economic cycle of goods, which do not see any of them now.
© Al Qabas 2015

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