Quote from 5to12:
'experienced oil speculators'
- know that production/supply/demand fundamentals operate over a longer term than speculation in the derivatives, and, as well as possible, take the lags into account.
- inexperienced oil traders ignore - or are ignorant of - this, imagining the futures/options markets to provide immediate and truly magical pictures of not just the present but what has yet to be. They believe in efficient markets, which is to say believe in what does not exist.
They will usually not admit this since, in the search to justify positions, tend to ignore non-supportive Facts while accepting highly questionable Assumptions up to and including tripe such as 'peak oil'.
From this, it's but a minor leap of faith to statements about SA - or others - producing at capacity, a leap which fails to grasp that this has been and is Managed production, and that actual production data is Proprietary. You might imagine that well known data providers' numbers are always accurate - if so, I'd suggest further research.
On the refining side, we constantly hear of light sweet vs heavy sour, no matter that more and more refineries, globally, have been increasing their ability to throughput heavier crudes.
On the demand side, there seems an ignorance of very basic economics accompanied by a belief that
demand itself is not cyclic but straight line. From this we can get into a maze of academic studies re. elasticities, and find whatever 'proof' required.
In short, 'experienced oil speculators' know that futures' prices contain non-fundamental variables that can and have pushed price well above (still ~$20) what fundamentals alone would dictate. That such gaps close is an historic given, as always, the 'trick' is when (and why).
I still expect to see ~40/bbl by JUNE ex but, depending on geopolitical events, may be very wrong.
