" />
Building a world of
resilient communities.

MAIN LIST

 

Morgan Stanley cuts European oil sector

LONDON - Morgan Stanley on Wednesday cut its weighting on the European oil sector to "neutral", saying sky-high prices could fall by $15-$20 a barrel in a short time.

Morgan Stanley, which had been positive on the sector since the start of the year, said the price of oil was currently too high compared with its historical trend and a number of factors supported a retreat in prices.

U.S. crude futures hit a peak of $44.28 on Wednesday, the highest level since being introduced on the New York Mercantile Exchange in 1983.

Demand for oil was price elastic and would fall if oil prices remained high, Morgan Stanley European strategist Ben Funnell said.

"It's not a stretch to say that a sustained oil price above $40 a barrel would make the global economic uptrend rather unsustainable."

In addition, prices were at risk of a sharp pullback because the market was so overweight in oil.

"The institutions are overweight, the hedge funds are very exposed and commodity traders are net long in a big way," Funnell said.

"You have to make pretty heroic assumptions about long-run oil prices to believe that the valuation can rise from here."

Editorial Notes: No coherent explanation of why exactly oil prices will fall so dramatically, except "Demand for oil was price elastic" (B.Funnell), a claim not supported by last 12 months of rising prices. Demand destruction is now officially a good thing, at least until it happens to you. LJ(ed)

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Find out more about Community Resilience. See our COMMUNITIES page
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.

 

This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.

Tags:  

The Great Burning   

What will we do when the Great Burning comes to an end?

The Renewable Revolution

Don’t hold your breath, but future historians may look back on 2015 as …

Peak Oil Notes - Apr 16

Oil prices surged this week.

Putting the Real Story of Energy and the Economy Together

 What is the real story of energy and the economy? We hear two …

Fracking Increases Radon Gas Hazard, US Study Finds

Another major U.S. health study has found that the hydraulic fracking of …

How Conservative Texas Took The Lead in U.S. Wind Power

Innovative government policies have helped propel Texas into the forefront …

The Collapse phenomenon

Michael Ruppert's last book, first starring film role and ascendancy to the …