Oil Stocks: John Stephenson

John Stephenson, senior vice president and portfolio, First Asset Investment Management

The OPEC Flex
I think OPEC probably will opt for a cut on the order of ~500,000 barrels/day..typically December season for cut..obviously worried about weak US dollar..inventories in general high, particularly in US..mixed opinion within OPEC itself..certain members believe cutting production might be dangerous for US economy, perhaps recessionary

Crude Oil Price
what will really raise price is colder weather as well as continued strong demand from rest of world..I believe this is secular bull market for 10 years but right now cyclical downturn..I believe we will see higher energy prices..no longer living in US-centered world..

Oil Demand
it has rallied..demand continued to grow strong >1 million barrels/year..demand will continue to go up, supply continue to struggle..places used to be open like Russia serious concerns..only 5 years ago China and India effectively off the radar screen

2007 Crude Oil Forecast
I try to look at what market is telling us..OPEC is black box, do not really know what they are doing..we typically input forward strip..I believe market is missing to a degree globalization..look for premium to strip..

Speculators
I think we are awash in money, relatively low interest rates for long time, starting in 2000 with tech bubble..I think emerging market equities doing extremely well..money is cheap right now and very available..anything from Nigeria, Venezuala..right now focus off commodities but it would not take much..tight supply