Our April 14th call for an upper range of $130 for WTI light sweet crude is being adjusted upward to $140/bbl for the same reasons we've outlined before: strong world demand and that the days of easy access to sweet crude are in the rear view mirror. As one example, last week it was reported that output from Mexico's Cantarell oil field plummeted to just over 1 mln barrels per day. True, the Mexicans could tap copious deep sea patches in the Gulf, but constitutional barriers bar the deep pocketed foreign partners from getting involved. Internal political dis-unity has prevented a constitutional change from taking place. So they've blown it to the point where there won't be any deep sea production from Mexico for 20 years. James Polk and Sam Houston are laughing in their graves.
The bottom end of our range remains intact. It's hard to imagine in a correction scenario that crude will dip much below $115. One way or another, we're certain that crude will rebound back to the highs of the year this year.