Is the world suddenly losing its appetite for oil and natural gas?
Posted on Thursday, August 14th, 2008 | In Energy Markets Energy and Capital
“Is the world suddenly losing its appetite for oil and natural gas? No, demand is still higher than ever before. Although the rate of growth is slowing somewhat due to record prices, demand in Asia and the Middle East is still red-hot and will continue to outweigh declining demand in the US and Europe…So what’s the deal?
The recovery of the dollar, however illusory, is the main factor taking down the price of gold, oil and other commodities. As I have said here more than once, the daily news about oil inventories, demand levels, even pipeline attacks isn’t nearly as important as the valuation of the dollar. (And no, it’s still not because of the evil speculators.)…
The reason is simply that when traders have lost confidence in the stock market, they fly to the safety of commodities, energy and gold. When confidence returns, they fly right back out and look for bargains in the carnage they just left behind.
Stay the Course
In short, what we have here is a trader’s market. The fundamentals have been thrown out the window, and now it’s all about herd mentality.
That makes it a particularly dangerous market for longs like you and me. If you’re not a very active trader who’s on top of every move, you’re going to take some hits. And if you’re not such a trader, you’re going to get killed if you try to play it.
Your best strategy is to simply stay the course. I have no doubt that my long term theses are still solid. Energy, commodities—particularly agricultural commodities—and gold are still the right place to be for long investors, and I don’t see that changing for several years…not until global peak oil is clearly behind us, and the consequent global recession sets in…”(8/13/08)
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Asia, energy, Energy Markets, Europe, Middle East, Natural Gas, Oil, Oil Inventories, Peak Oil, United States
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