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<blockquote data-quote="thoughtgypsy" data-source="post: 900884" data-attributes="member: 571">I'm expecting oil to go lower still.&nbsp; When recessions hit, there is less demand for finished goods, so factories remain idle and the demand for energy drops.&nbsp; I don't know how much lower it can go at this point, though.The shale oil producers were initially funded when oil was $100/barrel, but are now deeply in the red.&nbsp; They've been increasing the productivity per rig and focusing on the most productive wells, but it's still a losing battle at these prices.&nbsp; Many are holding emergency funding drives at exorbitant interest rates to keep the game going.&nbsp; They're highly levered and it's only a matter of time before some declare bankruptcy.That will take a lot of supply off the market at a time when global population is still rising, and many developing nations are starting to industrialize.&nbsp; Sure, Iran may bring more capacity, but the demand for oil is worldwide and all of the low hanging fruit has already been plucked.&nbsp; No other energy source can compete with the energy density, ease of use, and portability of oil.&nbsp; It also doubles as raw materials for the petrochemical and plastic industries.It will go lower for months to come, but I still think there's a much larger potential upside than downside on this trade.&nbsp; It's one dip I'll be buying.</blockquote>

[QUOTE="thoughtgypsy, post: 900884, member: 571"] I'm expecting oil to go lower still. When recessions hit, there is less demand for finished goods, so factories remain idle and the demand for energy drops. I don't know how much lower it can go at this point, though. The shale oil producers were initially funded when oil was $100/barrel, but are now deeply in the red. They've been increasing the productivity per rig and focusing on the most productive wells, but it's still a losing battle at these prices. Many are holding emergency funding drives at exorbitant interest rates to keep the game going. They're highly levered and it's only a matter of time before some declare bankruptcy. That will take a lot of supply off the market at a time when global population is still rising, and many developing nations are starting to industrialize. Sure, Iran may bring more capacity, but the demand for oil is worldwide and all of the low hanging fruit has already been plucked. No other energy source can compete with the energy density, ease of use, and portability of oil. It also doubles as raw materials for the petrochemical and plastic industries. It will go lower for months to come, but I still think there's a much larger potential upside than downside on this trade. It's one dip I'll be buying. [/QUOTE]

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