OTCPicks Market Blog

   Is one of the world's largest oil plays sitting right in the heart of Europe? Thanks to a light oil discovery only a few miles east of Europe's largest onshore oil field this is looking increasingly possible. Please call me at 1-800-404-8982 to hear about this amazing story....

The fear and pessimism that has accompanied oil's correction is a classic (and from a contrarian viewpoint it's a compelling) buy signal on its own.

One fear is that a slowdown in China might clobber oil consumption.  For insight into this possibility we defer to Goldman Sachs.  They predict a re-acceleration of China's growth.  Critically, China's Central bank just said it has switched its priorities from fighting inflation to ensuring China's 10+ percent economic growth continues.  With most countries we might be skeptical.  But China has both the need (a few 100 million poor that will not tolerate any postponement of economic growth) and the means (over a trillion dollars in surplus reserves.)   We take its statement as a buy signal.

This is just one example of the growing list of reasons for consumption to remain strong and oil prices to soon rebound.  But while many investors worry about falling oil prices the real story to watch is about falling oil supply.  And now the world's perennial supply optimists, the International Energy Administrations have finally started to come to grips with what is a dire situation.  They have recently increased the global depletion rate from 4% to 5.2%.  The translation is that nearly 4 million barrels per day of additional production must be developed per year just to keep oil supplies stable, never mind accommodate future consumption growth.