Summary
For many a wrong reason, bulls in crude believe that the “Old Man” (Mr. Naimi) is right (in his saying there has been "a fundamental change" in the oil market) when he says that the global economy is recovering. In addition, many oil bulls think the “Little Boy” (El Nino) will remain weak this winter despite most forecasts saying it won’t. To top off the confusing mix of signals, let’s mix in the H1N1 flu. It’s strange, but the mix might be something that needs to go into a risk portfolio.
Analysis
First, while I used to follow Mr. Naimi’s words to the “T” years ago when he was Saudi’s Oil Minister, I must say now with all due respect to the aging soul that in the last 18 months or so he is no longer a “geyser” and certainly he should have his cap re-tightened: his once-accurate insights must indubitably now be questioned.
Second, with respect to El Nino, it is hard to find a meteorological forecast at this time that says the Southern Oscillation phenomena of storms and abnormal temperature deviations will NOT intensify this November. Once NOAA and the Climate Prediction Center said recently that El Nino would strengthen through fall and winter, “group-think” forecasts came out left and right one after the other, like sheep jumping off a cliff, which said much the same.
And so where Naimi’s words and the majority-predicted El Nino are combined, I feel very lonely as of late. Granted, you have every right to doubt a forecast against the majority, but allow me to plant a new seed, because in “future-casting” I follow logic and research as well as scientific facts and relationships, I pack a good intuitive sense, and I question true intentions of public figures’ statements. My role is to combine my three areas of expertise: long-range meteorology, think-tank-style corporate futurism, and now – in my doctoral studies of natural medicine – the curve-ball, the H1N1 flu.
Currently, we have extraordinarily high oil inventories. Realize the contango has decreased by about half since late July. Don’t go on a spat of falling inventories since early August; look at the big picture and many of us might agree that they remain high. It may sound abrasive, but question those that try to detract attention away from this point and instead emphasize that the global economy is recovering. There is much more evidence of the high crude inventory situation getting higher than the “green shoots” global economy getting better. Trust me there, and that’s not a four-letter word.
A "V-shaped" economic recovery is highly doubtful, and so the probabilistic threat of an excess of oil inventories being liquidated is at least stable if not slowly building. In addition, refining margins – becoming more feeble around the world with every week it so appears – will likely get worse (even Valero Energy will likely show us more shutdowns into 2010). Add on to this, the strong scientific evidence that El Nino is getting “interrupted” and it’s very likely not going to strengthen much at all; in fact, it could even fizzle out before the end of the year, in direct disobedience to the government-run model. That means that North America will NOT have a mild winter. It means instead colder than normal across the South and in the East through December, with big ice storms from TX to VA. And then we will see milder spells develop. On top of it all, summer is now over and we have a different situation with flu this year: mandated vaccines (oh yes, people are being threatened their jobs if they don’t take the shot), potential military police checkpoints in leaving your state, all potentially spelling a sudden potential decrease in gasoline demand. That’s it…raise your eyebrows.
Oil bulls and bears tell me that these days they have to keep an eye on ALL the news, not just the handful of pieces that 'regularly' or in the past affect/ed crude prices. And one of the latest pieces of non-mainstream news is laws -- some of them of which can be argued are unconstitutional -- are being passed at this time. And in the case of the H1N1 flu that the Elite is fear-mongering us into making sure we get our poisonous vaccination shot, I propose a ‘what if’. So here’s the statement of the year: new and on-the-table vaccine-related laws could seriously have an impact on oil prices this winter. Say WHAT, Simon -- are you off your jolly rocker? Although the connection may sound bizarre, follow me on this one.
What if intra-State transportation in months to come takes a nosedive due to vaccine-related laws and home-isolation orders (already on half a dozen States’ Department of Health and Human Services websites, like Iowa and Florida) that restrict population movements? Yes, an increase in checkpoints by MP (military police), vaccine bracelets (you cannot “pass go” without it), and more. I know, it sounds all too much out of a comic book, but if you do your research (including at infowars.com), you will find that much of what I am describing (mandatory vaccine laws, large increase in military presence in towns across America) is ALREADY happening.
Even though this commentary discusses so many points – possibly seemingly disjointed to some – my point is this: if the current trends continue (again, not reported widely by the Elite-run media), then people and commerce COULD see an UNEXPECTED decrease in gasoline-based transportation.
It is tough to see the future, but if you start by joining the dots, and it starts to draw parts of a picture, then the risk becomes greater for something which currently may sound crazy to happen.
Simon says that with everything on the table, despite the colder than usual winter, there could be bigger fish on the table such that a rather notable downward spiral in oil prices this winter could occur. I just wanted to check if you are ready for this perhaps not too implausible scenario unfolding? Thanks for your attention.
Simon Atkins consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
