The best is yet to come and babe, won't it be fine? The best is yet to come, come that OPEC is fine.
Forget all of those worries about low oil prices. Oil's best days are still ahead of us. It is the best for OPEC, as it sounds like they are declaring victory over U.S. oil producers.
At least, so says OPEC's secretary-general Abdalla Salem El-Badri. Not only does he see a more balanced oil market in 2016, he went as far to say that the oil industry’s, “best days are yet to come” as demand will grow to 110 million barrels a day by 2040. OPEC picked a plum that demand will start to hum:
“At OPEC, we are hopeful that the industry will see a more balanced oil market in 2016.”
“We have recently seen a contraction in production from some non-OPEC producers and an uptick in demand growth.”
Mr. El-Badri is not the only OPEC leader that is sounding an optimistic tone for oil. Qatar’s Energy Minister Mohammed Al Sada said that prices have bottomed and there are signs of a recovery in 2016. Even Mohammad Ghazi Al Mutairi, Chief Executive of state-run Kuwait National Petroleum Company, is saying the oil market will get tight next year! OPEC is declaring victory in the OPEC price war and the best is yet to come.
In the meantime rig counts are falling. Oil prices rise as rig counts fall for the 6th consecutive week! Many OPEC members are making comments about oil that are rather friendly and we had a weekend where geo-political risk issues are rising. The bottom in oil is starting to develop and we still have upside presence. We are of the opinion that this market has a lot of room to go higher.
Rig counts do matter. Falling rig counts will lower U.S. output. Baker Hughes (N:BHI) reported that U.S. drillers removed nine oil rigs in the week ended October 9, bringing the total oil rig count down to 605, the lowest since June, 2010. U.S. oil output is peaking and we see the market tightening. Have you put on your long term bullish trades?