The blog is awarding itself and fellow-blogger John Richardson a pat on the back this morning. The reason is that investment bank Goldman Sachs, the largest player in commodity markets, has completely reversed its analysis of oil markets. They now accept our view that there is no fundamental reason for oil prices to be at today's high level.
The blog discussed this issue at length in its January 2011 White Paper, Budgeting for Uncertainty, and has maintained its view ever since. This has sometimes been a lonely position, as Goldman's voice is very strong in the markets. However, on Thursday, Goldman revealed they had changed their mind:
"The U.S. shale oil boom, which saw the country's oil production rising to multi-decade highs, caught many industry watchers and specialists by surprise and has dramatically reshaped the global oil flows over the past few years"
By coincidence, the blog has this week published another article on the subject in ICIS Chemical Business, which includes the sentence:
"In oil markets, there have been no major shortages of product on the scale of the 1979 OPEC embargo, or similar, to cause prices to rise. And production has actually been rising. US output, for example, has reversed years of decline, and is now back at 1996 levels. Similarly, inventories in the US and elsewhere have often been at near-record levels."
The blogs are delighted that that their readers have been forewarned of the real position all along. They cannot change the course of events. But at least, as with the collapse of Bear Stearns, the 2008-9 recession and September 2008 financial collapse, China's slowdown and other major issues, they can keep readers ahead of the game.