Historically, spare capacity of 1 to 2 million b/d is still very low considering all the uncertainties on supply in Nigeria, Iraq, Iran and the Gulf of Mexico and it means there's not a huge margin of flexibility if anything should happen to those producers. |
Iran and Nigeria are uncertainties that hang over the market and can change the fundamentals very quickly. |
It is dangerous to confuse children with angels |
The big question is when India and China begin to grapple with their subsidies. |
There are concerns that the longer $60 oil persists, the greater the pressure will come (on Asian governments) to cut subsidies. |
There is some prospect of fundamentals easing modestly this year. There could be more spare capacity this year than last year. |