EuropeStarting with Europe, where oil trades at a relatively new premium compared to North America, we may see the divergence close soon. Overall, I believe the European economy is sinking further into the abyss rather than climbing out. The United Kingdom is staring directly into the face of a double-dip recession. While oil and natural gas consumption has remained steady, production has declined. The U.K. is now a net energy importer instead of exporter. At the same time, the U.K. debt is
Either the U.K. will have to cut back on spending or it will increase energy production. One way or another, the end result should be lower oil demand from U.K. in relation to production. France recently sent a clear message to the markets that it does not want to be left out of the party that Greece is currently enjoying. Spain is faced with an unemployment rate or more than 24%, and that's the official rate. I have written many times that I believe Europe's fiscal and debt crises are just getting started, rather than about to end. My position has not changed on the demand side. Where the Next Boom Is Coming From >> Norway and the U.K. are the big oil producers in the North Sea. Like the U.K., Norwegian production has fallen in recent years, creating a catalyst for higher energy prices. Fortunately for Norway, Statoil has made
several discoveries in the last six months, resulting in an expected turnaround in production.