Oil at $114: Time to Short Again?

I love it when oil jumps to record highs on flimsy "supply disruptions."

The oil report from the IEA — the Paris-based energy watchdog for industrialized countries — said Russia, the world's biggest oil exporter after Saudi Arabia, averaged 10 million barrels per day from January through March, down 1 percent from 2007. That is the first time production has failed to exceed previous-year figures since 1998.

Artyom Konchin, an analyst with Russian investment bank Aton Capital, attributed Russia's oil supply lull to high taxes and insufficient reinvestment into infrastructure.

"It's not that we don't have enough oil," he said. "We just don't have enough capital going into developing the fields."

This news is great for oil infrastructure companies that the Russians will approach to spend some of their vast oil wealth to fix up their fields. So National Oilwell, Rowan, Schlumberger etc. its time to line up with your hand out for some of that Russian wealth.

It is true that the Russians are not running out of oil anytime soon. The price action can only be sustained if the Russians took another look at their oil supply and said that it was lower then what it had been previously. Since they didn't do that we have price raises backed with flimsy support again.