Slip Slidin’ Along
Mary Chapin Carpenter – http://bit.ly/1WuA4b5
Oil. That slippery, shiny stuff with so many uses; That black, gooey liquid that comes out of the ground and makes men rich…or crazy.
Oil. It has been the headliner in the news for some time now as Middle Eastern interests over-produce, upsetting the global supply equilibrium, driving down the price and forcing other oil producers to re-evaluate their business plans.
Oil, and its contrived overabundance, is affecting the economies of the world including those Middle Eastern producers.
Recently rumours appeared, and were later verified by news reports, that a pact had been realized between four oil producing countries. They had secretly met and agreed to a new production limit. http://bloom.bg/1QFfb95
There are many pieces to this announcement. First off, not all these pact countries are enamoured with each other and their respective foreign policies. Second, the limitation is itself laughable as it permits the continued over-production and subsequent over-supply of this resource. If the amount of oil being produced remains larger than the amount of oil being consumed, then what has changed? http://reut.rs/1oqQlmp
Yet the stock markets reacted strongly, first to the rumour and then to the actual news. Confetti and glitter abounded. Yes indeed, heady days are here again. http://bit.ly/1Tpgvl7
The rational investor though, has to ask “What caused this stock market joy?” The answer, as we see it, would actually be very little. Just a whole lotta industry wishin’ and hoping.
If the four pact countries had said that they were cutting production, then there is a physical shift but to say that we are overproducing and will keep overproducing but not more than we did in January, is not a cause for elation. So the sizzle was sold and markets jumped. http://on.mktw.net/1POZTyI
We feel there are many facets yet to this developing story. Though, there may be a resounding push for investors to “get in now”, we suggest prudence.
Presently the experts themselves are strongly divided on oil’s direction. Everyone is seeking the price bottom. According to some, we may be at that bottom; or we may be near it; or we may have a ways to go. Choose one. http://huff.to/211KENl
We are no expert. We have a guess, an opinion, a viewpoint, call it what you will. We think that this global economic game of chicken is far from over and its effects will be both long-lasting and diverse. As such we feel that there will be continued instability and from that instability, there will be further buying opportunities. http://bit.ly/1PUwSBO
But that’s just us.
East Qwimby Holler 