The nature of a capital intensive commodity like oil has become is that the lows will eventually lead to a boom because the infrastructure won't be in place the next time demand spikes. It can't stay too low forever, we are finally starting to see companies go under in Q4.

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Posted by Omada

Member since Jun 2015

695 posts

Posted on 10/1/15 at 12:36 pm to barry

Oil has, historically, been a boom and bust commodity and industry. The last bust gave Texas reason enough for them to diversify their economy, and that can be seen (outside of Houston, the oil capitol of America). Of course, people my age are too young to remember the last bust.

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Posted by GoldenD

Houston

Member since Jan 2015

938 posts

Posted on 10/2/15 at 1:16 am to barry

quote:
The nature of a capital intensive commodity like oil has become is that the lows will eventually lead to a boom because the infrastructure won't be in place the next time demand spikes. It can't stay too low forever, we are finally starting to see companies go under in Q4.

I completely agree with this. Every time companies make extreme cuts to CapEx in order to help short term cash flow, the effect several years down is like a slingshot. They won't be able to ramp up production quick enough in two to three years. Soon we should see companies begin to go under, production curves will continue to fall, and oil should stabilize. I believe we have seen the bottom. We've seen the dead cat bounce and oil rested right back around $45/bbl. Seems to be the spot where people jump on it if it dips below that magical number.

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