{"id":57541,"date":"2021-04-24T09:11:23","date_gmt":"2021-04-24T14:11:23","guid":{"rendered":"https:\/\/olduvai.ca\/?p=57541"},"modified":"2021-04-24T09:11:23","modified_gmt":"2021-04-24T14:11:23","slug":"the-coming-oil-shortage-part-i","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=57541","title":{"rendered":"The coming oil shortage \u2013 Part I"},"content":{"rendered":"
\n
\n
\n

The coming oil shortage \u2013 Part I<\/a><\/h3>\n<\/div>\n<\/div>\n<\/section>\n
\n
The oil price crash on the back of the COVID-19 lockdowns has accelerated the coming supply crunch. Both national and international oil companies have slashed CAPEX and maintenance spending, which will push up decline rates and US shale drillers finally focus on profitability instead of growth. Current longer-dated oil prices are too low to give enough incentive to oil companies to invest in badly needed future oil production. When they finally rise, gold prices will be pushed sharply higher.<\/strong><\/p>\n

In our gold price framework, we identified three main drivers for gold prices: central bank policy (through real-interest rate expectations and QE), changes in central bank inventories and longer dated energy prices. We found that these three drivers have a very high predicting value for gold prices over the past decades. When prices under- or overshoot the model predicted values, they tend to correct in the medium term. Current prices are well in line with the model-predicted prices (see Exhibit 1).<\/p>\n

Exhibit 1: Our gold price model has been a great predictor for prices over the past decades<\/p>\n

$\/ozt<\/p>\n

<\/div>\n

\nSource: Goldmoney Research<\/p>\n

We have discussed our outlook for the first driver at length in recent reports (see\u00a0Gold price framework update \u2013 the new cycle accelerates<\/a>,\u00a0January 28, 2021<\/em>, as well as\u00a0The equity-gold price conundrum \u2013 Part I<\/a>,\u00a0March 8, 2021<\/em>\u00a0and\u00a0Part II<\/a>,\u00a0March 19, 2021<\/em>.<\/p>\n

Our outlook for the second driver \u2013 changes in central bank inventories \u2013 remains the same as it has been for the past years: Central Banks in emerging markets remain net buyers of gold, more than offsetting the still ongoing (but much slower) trend of Western central banks being net sellers. More importantly, and as we have highlighted before, central bank purchases have not been a strong contributor to gold prices for the past years, neither to the downside nor to the upside.[1]<\/a><\/div>\n

\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The coming oil shortage \u2013 Part I The oil price crash on the back of the COVID-19 lockdowns has accelerated the coming supply crunch. Both national and international oil companies have slashed CAPEX and maintenance spending, which will push up decline rates and US shale drillers finally focus on profitability instead of growth. Current longer-dated […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[124,374,21107,588,2292],"class_list":["post-57541","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-central-banks","tag-gold","tag-gold-money-insights","tag-oil","tag-oil-shortage"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=57541"}],"version-history":[{"count":0,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57541\/revisions"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=57541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=57541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=57541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}