- Joined
- Sep 25, 2007
- Messages
- 201
Hi all,
An article from today`s edition of the Globe and Mail Report on Business. Excerpts:
Dream on. In a year or two, perhaps well earlier, $100 could look cheap again. You`ve got to ask yourself: What has changed since the selloff began a couple of months ago? The economy, globally speaking, is still growing. Many of the biggest oil fields are wheezing like geriatric smokers and few new discoveries of any significant size have been made. In the end, economics, oil geology and oil-reserve physics will determine the price of petroleum. All these forces point to higher oil prices.
Don`t confuse slowing demand growth for slowing demand.
At current consumption rates, a billion-barrel field would keep the world going for less than a dozen days.
Other factors could conspire to lift prices. Note that OPEC has announced a small production cut (in reality, the enforcement of the previous production quota). This delivers the message that OPEC sees $100 oil as its soft floor and that it will not tolerate, say, $60 oil. Nor might the oil companies themselves. Last week, the French energy giant Total, in its mid-year presentation, said its Canadian oil sands need a price of about $90 a barrel just to achieve a 12.5-per-cent internal rate of return, while its deepwater Angolan wells need $70.
http://www.theglobeandmail.com/servlet/sto...Story/TPComment
Keith
An article from today`s edition of the Globe and Mail Report on Business. Excerpts:
Dream on. In a year or two, perhaps well earlier, $100 could look cheap again. You`ve got to ask yourself: What has changed since the selloff began a couple of months ago? The economy, globally speaking, is still growing. Many of the biggest oil fields are wheezing like geriatric smokers and few new discoveries of any significant size have been made. In the end, economics, oil geology and oil-reserve physics will determine the price of petroleum. All these forces point to higher oil prices.
Don`t confuse slowing demand growth for slowing demand.
At current consumption rates, a billion-barrel field would keep the world going for less than a dozen days.
Other factors could conspire to lift prices. Note that OPEC has announced a small production cut (in reality, the enforcement of the previous production quota). This delivers the message that OPEC sees $100 oil as its soft floor and that it will not tolerate, say, $60 oil. Nor might the oil companies themselves. Last week, the French energy giant Total, in its mid-year presentation, said its Canadian oil sands need a price of about $90 a barrel just to achieve a 12.5-per-cent internal rate of return, while its deepwater Angolan wells need $70.
http://www.theglobeandmail.com/servlet/sto...Story/TPComment
Keith