Five or Six Reasons Why Oil Isn’t Coming Down… Yet

I just read a great post on the WSJ blogs titled "Five Reasons Why Oil Isn’t Coming Down… Yet".

In addition to the five reasons listed in the post:

Capacity
Heating Oil
The Weak Dollar
Speculation
Gasoline

I’ll give you a few more reasons why oil isn’t coming down any time soon. First, check out this chart of oil futures prices. Notice the textbook 'double bottom' at $88/bbl and then again at just over $100/bbl? Unless something fundamentally changes, and I can’t think what that would be, I can’t see oil below that $100 mark anytime in the next six months. I can’t see it below that $88 mark anytime in the next year or two.

And, second, while it’s certainly true that Petrobras will be bringing a lot of new oil to the market once Tupi and Santos are online, that won’t be for at least 5 years and could easily be 10.

So, here’s hoping you own some energy stocks to offset the pain of that $4/gallon gasoline you’re going to see this summer.

(Disclosure: I (continue to) own shares of Petrobras (PBR).