Is oil priced to perfection? Well in the last few weeks you have heard a lot of noise from a lot of places about where oil prices are going, yet if you want a consistent message and want to cut through the noise to look at the big picture, look to the “ Energy Report” if you want to be hedged to perfection.

You have folks telling you that oil is priced to perfection and that the risk from the Iranian sanctions are already priced in. Of course that is brought to you by the same folks that told you that oil would not trade above $40 because of shale oil production. They point to the recent retreat from hedge funds and calling the spike to over $75 a barrel a speculative bubble. They point to recent data that seems to suggest the market is well supplied.

Yet, they fail to take into account that from a refinery run standpoint, demand is seasonally at the bottom and is only going to improve. We still face a situation where global spare production capacity is at a historic all-time low in a world where geopolitical risks to supply are rising. Even OPEC Secretary-General Mohammad Barkindo said global spare oil capacity was shrinking, adding that producers and companies should increase their production capacities and invest more to meet current demand. The International Energy Agency warned that  the decline in Iranian oil exports, which dropped 800,000 bpd since May when the United States announced it was withdrawing from the Iranian nuclear accord that automatically reinstated U.S. sanctions, to September, to accelerate next month. Saudi Arabia has the majority of the world's global spare capacity, which was estimated at a low 2% in September according to DTN.

They fail to account for OPEC countries that can barely pump their oil quota. Even as Saudi Arabia promises to pump more oil to make up for lost Iranian and Venezuelan supply, they admit that their ability to go much beyond that from a production standpoint. Saying we are priced to perfection I guess is a safe call if you don’t know if the market is going to go up or down.

Then you have the folks after the recent run-up in oil prices that wanted to be the first ones to predict $100 a barrel oil. They started to jump on the oil bandwagon as they started to consider the overwhelmingly bullish underlying fundamentals for oil. Of course, most of those folks were not predicting anything near $100 a barrel in the beginning of the year and just recently raised their forecast just as oil hit its pause point for its almost $10 correction from the highs.

I can only imagine that the $10 break in oil will bring out the bearish calls and for an imminent collapse of prices, yet we had a near $10 correction after the run-up to Memorial Day, then right after the Fourth Of July, and of course into the ides of August only to rebound and make new highs every time. From a seasonal standpoint the selling should be ending at the end of October and the buying should begin in November.

Of course, hedgers and users of oil are not helped with these wildly changing prices forecasts. You can’t be chasing the market or chasing these forecasts but need a constant message, that is well reasoned and stable. The truth is that despite the recent correction, the upside price risks in oil remain. That is why we have held to our year-end target of above $80 by the end of the year since the beginning of the year. We called a generational bottom in oil near $26 a barrel, at a time when many thought oil was going to stay low forever. Despite the volatility, we are really working higher as global demand rises and the lack of investment has reduced spare oil production capacity to all-time lows. Shale oil has been amazing, but even with their best efforts to replace traditional oil projects the global spare capacity numbers show clearly, we are going to be undersupplied.

Sure, today oil is worried about weakness in the Chinese stock market and the possibility of a global recession, the truth is that if that does not happen we are going to be short of oil. Despite the slowdown in China, recent data show that Chinese oil demand is near the all-time highs. Refinery through-put in China increased to 12.49 million barrels per day (bpd) in September. On top of that China's crude imports are expected to remain elevated into year-end as China will  continue to add stimulus. Sure, if we do go into a recession globally that will change, but I do not see a recession. In fact, I think we are years away from one.

I am also tired of folks that bash speculators for moving the price of oil. The speculators serve a valuable purpose for price transparency and allow users and producers to get transparent, so they can hedge and do business. Why do people blame speculators when they are wrong the market? Why are they against free markets? Do they have a better system for pricing oil? I think not.

While the run up to $77 a barrel may have been premature, driven by hedge funds, it is a sign from the market about how high prices can go. So, in other words the market is giving you an opportunity to get hedged before it goes back up. Maybe it won’t get there yet. If you sold oil in October in recent years, at the end of October because of the doom and gloom forecast you paid a price. Maybe this year will be different, maybe the wheels are coming off the global economy. Yet why take that chance?  Over the last few years I have spoken to more folks that have been not hedged because of crazy bearish forecasts.

You also have read of the murder of Saudi journalist Jamal Khashoggi. Turkish President Recep Tayyip Erdogan said on Tuesday that the murder of Saudi journalist Jamal Khashoggi was planned by Saudi officials days in advance. Addressing the ruling, AK party lawmakers in the capital Ankara, Erdogan detailed Khashoggi's disappearance and murder, but stopped short of accusing Saudi royals for the "savage" killing that has caused global outrage. "On the 28th of September, Khashoggi arrived at the Saudi Arabian consulate for him to sort out his wedding paperwork," Erdogan said during the speech in Turkish parliament. "It seems that at that time, they [Saudi Arabian officials] started to plan a roadmap for his murder," adding that some officials left Turkey and traveled to Saudi Arabia, "indicating they planned the murder". That is according to Al Jazeera.

There will be increasing pressure for the Trump Administration to take some type of action for this horrific event.