Why are we at $91 a barrel?
No. 1, hope for economic recovery is underway. A lot of people are more optimistic now. No. 2, the stock market is at its highest level since August 2008, and oil prices go hand in hand with stock prices. Third, there's a lot of speculation. The same people who brought us that 2008 oil price collapse are coming at it again. And I think we're going to take oil prices higher.
So $100 a barrel is pretty much a foregone conclusion?
I wouldn't say foregone conclusion, but it is not out of the question either.
What about beyond $100 a barrel?
Once you break into the triple digits, it becomes pure speculation because I don't believe that a commodity that is very profitable from $65 on should be trading at a 50 or 60 percent premium. Once you see gasoline prices creeping up, people will take notice and oil prices will moderate.
There's this idea that oil demand has been off the mark in developed nations. Will demand revert to the trend that we saw pre-crisis?
Demand will continue to rise in the emerging economies, and will continue to flatten or even decline in the advanced economies. Yet both developing and developed countries are working very hard to improve efficiency. So we (OPY) are likely to see global demand for oil increase, albeit at a much lower rate than was the case in the last five years or so.