There are about 4 million barrels-per-day of sustainable capacity in Saudi oil and what is coming out of Brazil - even after weighing the realities of production slowdown in Iraq and Iran, according to Morgan Stanley.
When the global economy churns higher, the GDP expansion phase can last a maximum of three years before oil prices will likely spike again to levels where demand is neutralized. Also expect increased pressure from "green" alternatives taking hold.
Oil fundamentals are not, however, what the market was trading on when oil hit $147/bbl. Despite real demand from GEM and increased stress on supply in Nigeria and Venezuela etc..., oil has become a speculators game and will trade like gold as an alternative to holding cash, or more importantly, the US dollar.
If you like oil, you like emerging markets.
Oil prices rose above $59 a barrel Monday on the NYMEX.
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