Was I the only one cheering at the pump this week when the price to fill my tank crept up a few bucks?
Take these points produced in a recent Seeking Alpha post into consideration:
- Production is cut across the board
- Rig count down (you’ve sunk my battleship!)
- Prices begin to inch up, before production fully rebounds
We are all waiting for #3. Looking backwards to 2008, it took a full year for prices to hit their bottom, and they hit it twice, just to make sure we were listening. From this glut, prices rose 100% in just three months.
Alpha’s prediction is that prices will show strength before production drops or rig counts increase – contrary to what is generally thought. Just this week, we are starting to see pricing strength. Is that speculation of a supply correction?
We don't know. But, while things may seem scary, we’ve been here before and we know how this ends.
We’ll leave the short term trading moves to those of you who don’t build software for a living, but any cash we’ve got sitting under the floorboards in the office we are going long crude!