Tom Kirkman

"The Global Growth Story is Starting to Look a Little Shaky"

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Take note of this one key sentence in Nick's article:

> > >  "In short, the global growth story is starting to look a little shaky."  < < <

Please pay attention to that one sentence, when oil bulls keep pushing for triple digit oil - because the cure for excessively high oil prices is ... excessively high oil prices.  Excessively high oil prices kill demand, and kill global growth.  Which results in a severe crash in oil prices later on.

Here's hoping we aren't heading toward a 2014 / 2015 oil crash once again.

And let's hope the OPEC + Russia + Frenemies cartel can be agile enough to move with the global economy, without letting oil prices swing too high or too low.  It's going to be tricky.

(I'm hoping for $65 oil this year, but that's just my opinion.)


OPEC’s Dilemma: Demand Destruction Or Production Boost

... In short, the global growth story is starting to look a little shaky.

All of this puts OPEC in a tricky position. If it keeps the production cuts in place, oil prices could go too high. Historically, high oil prices help contribute to economic slowdowns, so OPEC runs the risk of sowing the seeds of an economic downturn, which would inevitably drag oil prices back down.

But, OPEC also faces risks by increasing output as well. The danger is that the global economy softens anyway, and OPEC ramps up production at the same time when the economic cycle moves into a slow phase. While higher oil supplies would lower prices and thus blunt the negative fallout of a cyclical downturn, OPEC would also be pumping oil just as the market needs less of it. The result could be a decline in prices far beyond what the cartel wants.

As a result, there are no clear or easy answers for OPEC and Russia when they meet in two weeks.

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