Oil consumption is driven by the economy. Bad economy means lower usage. Oil supply is driven by prices. Rising prices meant any source of oil was ok. Falling prices means that drilling will fall and supply will follow.
I expect oil to stabilize and start to recover late this year. It won't necessarily be because the economy is totally recovered. I expect that supply cutbacks will begin to take effect and that inventories will get back in balance by then.
Natural gas could take longer. Again the low prices will discourage drilling and production but increases in supply from the shale plays are going to make it harder for supply/demand to come into balance.
We have had a cold winter and still ngas is at high inventory levels.
It's going to take some time for dramatic lowering of capex spending to show up in inventories. Once that happens and the economy stabilizes, we should see shrinking inventories and the fundamentals should take hold. I don't think it will be one single catalyst. Oil and gas may go their separate ways for awhile in terms of pricing. I have sold many of my energy stocks. I am still holding some illiquid stocks that I can't sell without giving them away. The oil and gas are still in the ground and hopefully management will figure out ways to survive until prices head back up. Bobwins
Please post stock symbols first in all your posts. If it's a foreign stock, please list the US pk equivalent symbol.
If the Commodities Boom is Over, I am just a Gold Bug headed for the Windshield of LIFE
