Demand has been rationed not just for ag commodities, but for energy as well. Global oil demand, which was supposed to grow unabated, has stalled, says Phil Flynn, vice president and energy analyst with Alaron Futures and Options.
"Supplies at Cushing, Okla., where the world benchmark price is set, are at an all-time high,” he says. In fact, we're almost out of space to store it, he adds. "Because land storage cannot be found, they are now storing oil on ships. Right now, just floating around in the ocean somewhere, there are oil supertankers filled with about 80 million barrels of crude—oil that in many cases is having a hard time finding a port to unload. This is the most oil in floating storage in at least 20 years.”
The seeds of the next boom are being planted right now. "Current lower prices mean half of current or planned production capacity is at risk,” says Aaron Brady of Cambridge Energy Research Associates. "So there is upside price risk during 2010.” His estimate is the $60/barrel range, "unless the economic slump lasts longer and oil enters a superslump.” —Linda H. Smith