“Thanks for a great service. Here’s to a hugely successful and healthy 2014. 

 “I was just wondering what your thoughts were regarding the oil complex given your thoughts on industrial metals and soft commodities. Where will the oil complex be headed or will it remain range bound? Welcome your thoughts.”

David Fuller's view

Thanks for your thoughtful comments and good wishes.

 I discuss oil prices in every ‘big picture’ Friday Audio but here is a brief summary.

  I do not think we face another spike similar to 2007-2008 and I currently expect further ranging by Brent oil.  However, we are still not out of the tight supply/demand situation which I have frequently discussed for a number of years.  Supply is increasing but not fast enough because many countries are resistant to fracking and the switch to natural gas consumption which the USA leads. 

 Moreover, energy consumption will rise as the global economy recovers.  Solar energy and wind power are only making a small reduction in demand for crude oil.  Nuclear power could make more of a difference but it is out of favour for reasons of safety, expense and the unacceptable problem of storing nuclear waste.

 I think natural gas will eventually become the dominant fossil fuel, but only when people produce more of it.  There is plenty of natural gas available but we need to see more production to ensure the lower prices for crude oil that I have forecast in real (inflation adjusted) terms before the end of this decade.  Meanwhile, the global economy will be at risk if Brent oil pushes above $120 for more than the short term.