The thesis is higher interest rates would cause currently financialized inventories to come out of storage.
I agree but I wish to heck it hadn't been Verleger making the argument. See: UPDATED--Izabella at Dizzynomics: "Fed, QE and commods" for a couple of his prognostications gone horribly wrong, along with her Alphaville posts "What have inventories got to do with QE?" and "WTI and the taper effect".
All that being said, here's a voice in agreement with Verleger.
From Petroleum Economist:
Replay of 1986 price collapse looms
03 June 2013
Chatham House warns that the price of oil is heading for a crash similar to the one in the mid-1980s, when world oil prices fell by over 50%, writes Damon Evans
THE oil price is heading for a crash reminiscent to the 1986 collapse, when world oil prices fell by over 50%, an energy economics expert from UK think tank Chatham House warned.
HT: the Atlanta Fed's MacroblogProfessor Paul Stevens, who is also a specialist on the political economy of the Gulf States, told the Australian Petroleum and Exploration Association (APPEA) conference that the oil price is heading for a big fall over the next one to two years.
He had that while there are striking similarities to the price collapse in the period 1981-86, this time around, he believes the correction will happen in a much shorter space of time and it will rebound quicker too.
In the run up to the crash of 1986, Saudi Arabia was acting as a swing supplier to protect prices, new oil provinces lurked on the sidelines, notably the North Sea and Alaska, but required higher....MORE