Oil Pricing And Fundamentals Often Dislocate…Like Now [CHART]

Oil Pricing And Fundamentals Often Dislocate…Like Now [CHART]

Oil Pricing And Fundamentals Often Dislocate…Like Now by Todd Sullivan, ValuePlays

“Davidson” submits:

Below is the updated chart of the U.S. Energy Information Administration monthly data from 2010- which includes Friday’s report. Link:

Two weeks ago I sent the EIA data in chart form with the comment that psychological not logical thinking is roiling the security markets. Where in 2012 fears of “Peak Oil” resulted in a price spike over $140bbl during a period when PRODUCTION EXCEEDED CONSUMPION, today’s investment panic is based on several months of excess production. The only explanation why “Peak Oil” panic occurred in 2012 but not today has to be laid to market psychology. Market psychology is impossible to predict.

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Friday’s data from EIA indicates that CONSUMPTION EXCEEDS PRODUCTION (92.4Mbpd vs 91.9mbpd).

Be patient!! Market psychology always has periods of excesses in any direction. This always reverses if not supported by economics. Our current panic that oil production is in excess with no change on the horizon is one of those periods. It will pass!

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.
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