, Jim Rogers Blog: One should own energy, as the energy reserves continue to decline worldwide

Sunday, December 18, 2016

One should own energy, as the energy reserves continue to decline worldwide

A strong outlook for crude prices may also stop the Reserve Bank of India on its tracks from cutting interest rates aggressively, as a spike in oil price has the potential to swell the inflation number quickly.

Jim Rogers says the outlook for the black gold has turned healthy in the wake of the Opec production cut as it will reduce supplies after lower exploration activity in the past few months.

Crude prices soared nearly 10 per cent on Wednesday following a deal among the Opec members to cut output by around 1.2 million barrels a day (bpd), or over 3 per cent, to 32.5 million bpd from January. 

Rogers said Iran's nod to production cut was a surprise, as it had been opposing such a deal quite a lot. "Let us see if they actually do it. We all know that Iran needs money. What they are going to figure out is whether less supply and higher prices are better for them or vice versa. I am sceptical, I have heard this many times," Rogers said. 

He, however, said the fundamentals are improving for the crude oil market. He noted that the supply is going down, exploration activity is falling and reserves worldwide are already declining.

"Nobody in the world has higher reserves now than they had three years ago, except may be the frackers. The frackers cannot make money at these prices," Rogers said.

He, however, said the fundamentals are improving for the crude oil market. He noted that the supply is going down, exploration activity is falling and reserves worldwide are already declining.

"Nobody in the world has higher reserves now than they had three years ago, except may be the frackers. The frackers cannot make money at these prices," Rogers said.

Rogers, who calls himself as a terrible trader market timer, said crude oil prices were making an attempt to hit a complicated bottom for two or three years. 

"Crude prices fluctuate up and down. They have ranged between $40 and $30 and that will probably continue for a while, more likely towards the upside than the downside. Yes, $60 a barrel is not an unusual number. It is still way down from where crude prices were just two years ago," Rogers said. 

"One should own energy, as the energy reserves continue to decline worldwide. Saudi Arabia has not had a major find in many years, nobody has. Iraq, Nigeria and Iran nobody has found oil, except frackers. The fundamentals of oil continue to improve," he pointed out.
- Source, ET