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Good News (At Last!): Oil Prices Set To Continue Fall

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Good News (At Last!): Oil Prices Set To Continue Fall

Old 19th Oct 2001, 14:44
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The Guvnor
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Thumbs up Good News (At Last!): Oil Prices Set To Continue Fall

From today's Scotsman:

Two-year low hit
OIL & GAS

WORLD oil prices dipped to a fresh two-year low yesterday as dealers continued to bet against any quick action from OPEC to halt a 25-per cent, month-long price slide. Dealers said promises to help stabilise the market by the cartelís officials were proving empty, and further losses appeared likely.

Brent crude oil futures were trading at $20.79 per barrel, down 20 cents, having sunk to $2.55 earlier - the lowest level for two years.

Simon Games-Thomas, of NM Rothschild & Sons in Sydney, said: "The failure of OPEC to act will in all probability lead to another short-term drop in prices, unless OPEC can pull a rabbit out of the hat in the next day or so."

OPECís three biggest exporters, Saudi Arabia, Iran and Venezuela, called on producers outside the cartel to help rein in output and lift prices out of their current slump.

But so far, there appears to be little impetus from non-OPEC states to join its efforts, and traders have become impatient with the groupís inaction.

The OPEC trio said another output cut was a possibility, due to the sharp downturn in oil demand after last monthís attacks on the US.

Speaking at the cartelís headquarters in Vienna, Venezuelan President Hugo Chavez said: "It would be useless for OPEC to reduce production if non-OPEC countries keep producing."

Lawrence Eagles, of GNI Research, said in his daily briefing notes: "Traders took the lack of aggressive determination to do something... as a clear sign of the impotence of the cartel."
 
Old 19th Oct 2001, 15:13
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Talking

Guv

Dont post positive comments onto this
forum as you will undermine your reputation
as a doom and gloom merchant.

Joking aside this will reduce costs in
cash strapped airlines so its good news indeed

Makes the L1011 look more like a runner!
RVR800 is offline  
Old 19th Oct 2001, 17:34
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Red face

While it grieves me to say that the Guv is being too optimistic, the medium to long term prospects for oil prices are dire (or fantastic, if you're no fan of large-scale atmospheric combustion of hydrocarbons). The chances of Saudi coming out of this unscathed are vanishingly small, and even if it does the ratio of reserve discovery to extraction is down to around 1:4 and falling.

I expect to see oil at around $100/barrel by the end of the decade. There are alternative sources of energy for all forms of transportation, except aviation. Things will perforce change, and probably more rapidly than anyone really believes.


Some bedtime reading:
http://www.newyorker.com/FACT/?011022fa_FACT1 -- how vulnerable is the Saudi royal family
http://www.hubbertpeak.com/ -- the Hubbert Peak theory of oil production. Website looks more swivel-eyed than it actually is.

R
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