Click on the headline (link) for the full text.
Many more articles are available through the Energy Bulletin homepage
Enjoy low oil prices while you can: Henry Groppe
Barry Critchley, Financial Post
Henry Groppe, founder of Houston-based Groppe, Long & Littell, is 83 years old, a vegetarian and has been a forecaster in the oil and gas business since 1955. And he is not afraid to go against the conventional wisdom. One year back he predicted the oil price would collapse in the second half of the year — and not reach the much talked-about price of US$200 a barrel.
Now Groppe, a special advisor to the Toronto-based Middlefield group of companies, has done his analysis and concluded that between now and year end the price of oil will double. If that forecast pans out, oil will hit US$80 a barrel, or more than double what others are predicting. His advice to consumers: Enjoy the current low gas prices, because they won’t last for much longer
(7 February 2009)
Oil Prices: Get Ready for the Rebound (analyst Fadel Gheit)
Keith Johnson, Environmental Capital (blog), Wall Street Journal
Oil bears claimed victory Friday, pushing crude down as much as 6% before finishing down about 2% as grim employment data underscored the dismal shape of the U.S. economy.
But not everybody’s an oil bear. Fadel Gheit, top oil analyst at Oppenheimer & Co., is part of a group of supply-siders who worry that OPEC’s drastic steps to halt the oil-price slide are going to combine with an economic recovery to create a big rebound in oil prices. An outspoken critic of the role speculators played in driving up oil prices last year, Mr. Gheit sees fundamentals playing a bigger part this year.
We asked Mr. Gheit how he sees the oil market evolving.
WSJ: Like many analysts, you’ve often warned of a looming supply crunch that could send oil prices back up. How does that square with recession in the U.S. and signs of weakening demand?
Fadel Gheit: The market has been looking at OPEC as a savior. But as OPEC cuts, demand continues to slide—OPEC is just playing catch-up right now with falling demand. Once that stabilizes, prices will rise.
I call it ‘the second oil bubble.’ The longer oil prices remain low—and low in my book is below $50 a barrel—the more violent the rebound is going to be. It’s not a question of if, but when.
WSJ: Because lower prices mean less upstream investment?
Gheit: Look, oil companies are going to lose 40% of their cash flow this year, and capital expenditures will be cut sharply […] If you thought the fourth-quarter numbers [for oil companies] were bad, wait until you see the first-quarter numbers. Oil prices are now about where they were five or six years ago, but the cost of extracting oil has doubled in that time…
(6 February 2009)
Why Peak Oil Prices May Rocket Higher (Grandich, Yardeni)
James Pethokoukis , Capital Commerce (blog), US News & World Report
Sure, oil is relatively cheap now. But what about when the global economy turns around? Might it then rocket higher again? This via Commodity Online, from oil expert Peter Grandich (bold is mine):
Yes. We suggest that people contain any oil purchases between $35 and $40—not above $40 at this point in time. Oil longer term is far more likely to be higher than that level than equities looking out the same timeframe. As bearish as oil looks right now in the demand destruction, we’re also having development destruction, which happens very fast. We have argued for almost four years that the peak oil theory, which many people latched onto during the last dramatic rise, couldn’t come into play without another recession and without what has been taking place in the oil market recently. As we get into the next economic recovery, which I think will be more a world recovery versus a U.S. recovery, the peak oil argument could have a more pronounced effect on the oil price. That’s particularly true in light of the fact that this decline has caused just about everybody to stop any real new exploration and hold off where expectations of oil were high, such as the tar sands in Canada.
Me: Superstrategist Ed Yardeni recently made a similar point:
(7 February 2009)
Oil output could fall by 30m bpd by 2015 – Merrill
Tom Arnold, Arabian Business
Steep falls in oil production means the world now needed to replace an amount of oil output equivalent to Saudi Arabia’s production every two years, Merrill Lynch said in a research report.
Non-OPEC crude oil production may have already peaked and international oil companies faced the prospect of both younger and older oil fields declining steeply, the firm said in the report released on Wednesday.
(4 February 2009)
Iraqi oil minister: OPEC to cut production
Associated Press via USA Today
OPEC members are expected to cut oil production when they convene in March to try to push up prices to at least $70 a barrel, Iraq’s oil minister said Saturday.
Hussain al-Shahristani also identified the country’s political tensions, bureaucracy and lack of funds as main impediments to developing Iraq’s hydrocarbon resources.
OPEC cuts have so far failed to stop the dramatic fall in oil prices since July. The drop has hit Iraq particularly hard. The country depends on oil revenues for nearly 95% of its budget. As a result, the government was forced to slash its 2009 draft budget from $80 billion to $64 billion.
(7 February 2009)
