Here we go again… Oil Price Speculation or Real?

CNBC.com this morning has an article that I wasn’t expecting until at least August this year. But here it is all the same. The topic? Oil Prices Resist the World’s Recession Trend

Their main point:

The resilience shown by the oil markets is not because of any improvement in the global economy or rise in oil consumption. Global demand remains on course for its steepest drop since the early 1980s, and oil inventories are at their highest levels in 19 years.

Instead, analysts said, oil is once again being sought by investors as a refuge against a slumping dollar and rising inflation.

Lets stop right there. Slumping Dollar? The US Dollar has gained over 20% over the Canadian dollar since July and the same can be said for the Euro and Yen. INFLATION? Last month, the US officially experienced DEFLATION (negative inflation)… so I’m really not sure what planet CNBC is on!

But then, the very next sentence, they take a different tone:

Stabilization of the oil price is also a victory for the OPEC cartel, which has succeeded in cutting output sharply to match lower demand.

and so, once again, it’s all evil OPECs fault. Because, you know, it has nothing to do with plummeting oil production in Mexico (World #3 Super Giant field Cantarell is now producing less than other Mexican fields).

Oh.. but wait…

The perception remains well ingrained in the market that oil supplies, while plentiful today, may prove insufficient once demand picks up again.

Huh. So you mean investors don’t buy the “drill drill drill” mantra? You mean investors have looked abroad and seen conventional production in Mexico, Canada, the UK, Russia and Norway declining even while prices skyrocketed over the past 5 years? You mean investors have seen Saudi Arabia hit a wall, unable to pump more oil without damaging it’s fields.

Investors know this.

The OECD knows this.

So why the “speculation” talk? We have been given a great opportunity during this recession… depression, the first shrinking of the world economy since WWII (OECD), demand is knocked down. The pressure is off… people are LOOKING for work. We need to put them to work creating a new economy… low energy, high efficiency, low carbon.

If we wait until “recovery” happens, then we are doomed to be right back here within 2 years.