The article is calling for a "sell low" strategy [0]. The author is mistaking low oil prices as from lack of demand. This is part of the story, but a small part

The article is calling for a "sell low" strategy [0]. The author is mistaking low oil prices as from lack of demand. This is part of the story, but a small part. The major factor is high supply, mainly from Saudi Arabia [1]. The motive is not entirely clear. Most think its a fight for market share, with Saudi hoping Russia, Venezuela, US fracking, Canadian oil sands, or other middle east players blinking before the Saudi's. They are probably right, that other players have high expenses, less cash on hand, and will have to fold first. Certainly US shale is hurting, and practically no new oil sand projects are starting in Canada. In fact, this probably signals a good time to buy new assets, for companies prepare for this. What I think Saudi/ OPEC is missing from the equation is that market share is not something that can be won long-term. US shale may have to cut back this year, but I think the time scale to turn production back on is about one year once prices return. Oil sands are a longer-term investment, but this also means that low prices don't cut production - the expensive investment has already been made. Another major thing the article is missing from the equation is the demand side. Decrease in demand at the moment has come from efficiency investments that were economically driven by high oil prices. People bought smaller cars, took fewer road trips, and invested in home insulation. With oil prices lower, many of these things become less economical. Demand will increase, prices will go up. [0] - http://www.nasdaq.com/markets/crude-oil-brent.aspx?timeframe=10y http://www.nasdaq.com/markets/crude-oil-brent.aspx?timeframe... [1] - http://uk.businessinsider.com/saudi-arabia-has-no-plans-to-cut-oil-production-2015-11 http://uk.businessinsider.com/saudi-arabia-has-no-plans-to-c...