In the most recent issue of TWST, we spoke with L. Farrell Crane of Energy Opportunities Capital Management, a portfolio management firm focusing on the Energy Sector. He talked us a little about where he feels the pressure on oil prices is going to come from, and when we’re going to start seeing things getting worse going forward:

Mr. Crane: In this recent economic downturn we have seen reluctance on the part of the oil producers to increase capital spending given uncertainty with respect to what they expect to receive in terms of oil prices going forward. That slowdown, again, is like stepping off the treadmill. If we doubled our spending and production fell, it is not difficult to predict what will happen to supply when spending is held constant or, worse yet, reduced. We expect that we are going to see some supply problems manifest themselves beginning in 2010 and more considerably so by 2011 and 2012. Obviously the specific timing of a supply crunch will depend on the extent to which we see an economic recovery or continued slowdown. Clearly any increase in global economic activity and a related increase in energy demand will only accelerate the timing and exacerbate the issue. I think, ultimately, the supply challenges are going to be the driving factor in oil prices going forward.

For the complete Investing Strategies report, including the full interview with Mr. Crane, as well as a variety of portfolio managers from across a wide range of strategies, click here. 

This entry was posted on Monday, August 3rd, 2009 at 5:53 pm and is filed under Natural Resources Stocks. You can follow any responses to this entry through the RSS 2.0 feed.