The first circumstance is very fleeting, and we could describe it as sa sense of normality amidst the chaos, although I personally believe that the exploitation of recent geopolitical crises (since the 11 September 2001) has led to a certain degree of market immunity to these factors (see the virtually negligible impact that the latest spasm has been having Russian-Georgian). As for the increase in supply, this is estimated as the net figure between the start-up of new extraction operations and the decline in production due to the depletion of old wells. Finally, the slowdown in the rate of growth in demand is driven by various factors: the destruction of demand caused by high prices, the impact of the economic crisis in the developed world, and a certain moderation in the rate of growth in emerging economies, also due to the knock-on effects of the crisis in the developed world. However, it should be clarified that the growth in demand from these emerging economies is still far from being offset by the slower growth in demand from the developed world; this is why we speak of a slowdown in the rate of growth of demand rather than a decline in demand itself.
For all these reasons, according to a recent report by the International Energy Agency (IEA), the forecast for the balance between the increase in demand and the potential for supply growth clearly favours supply. But bear in mind, this is only for 2008 and 2009, as the IEA anticipates that the crisis situation in industrialised countries will begin to improve from 2010 onwards, at which point the balance will even out. What will happen from 2011 onwards? You’ve guessed it: the Agency forecasts a clear shortfall which will undoubtedly send prices soaring once again to record highs.
In our view, the period of recession in the industrialised countries could extend well beyond 2009 and 2010, but in any case a medium-term rebound in oil prices seems inevitable, due to the enormous consumer demand from emerging economies. Consequently, the crisis in the developed world also seems far from being a short-lived one, as it has a very significant first-round inflationary component in the macroeconomic figures; but unfortunately (or perhaps not), this crisis appears to do little to encourage a moderation in future energy consumption.
The technical correction we are currently experiencing appears to be nothing more than that: a correction within a rally, the fundamentals of which continue to point towards rising oil prices in the medium to long term. And the worst thing is that there does not seem to be palliative care tools beyond simply moderating consumption and the pursuit of what is, for the time being, the pipe dream of abundant and cheap energy. Let us hope that speculation does not even sweep away the respite offered by the correction before its time. Nevertheless, there are several voices predicting the benefits of the energy crisis through greater efficiency brought about by scarcity. And we will always have the joy of being poor but efficient, in contrast to the excesses of the rich and the oil producers… or was it the other way round… what a mess.
«When you jump for joy, make sure no one pulls the ground from under your feet.»