One robin does not make a spring, but I was struck by the subtext of this article at Bloomberg, “OPEC Failure Foretells Decline 10 Years After $10 Oil.”
The mention of $10 oil is an odd bit of anchoring. And the general tone is surprisingly pessimistic. Key excerpts:
A decade after OPEC failed to prevent oil from collapsing to $10 a barrel, the world’s biggest producers are delaying actions needed to arrest the steepest slide in energy prices…
“They are riding the economic wave just like the rest of us,” Adam Sieminski, Deutsche Bank AG’s chief energy economist, said in a telephone interview in Washington…..
Merrill Lynch & Co., forecasting the first contraction in global demand in a quarter century, sees crude bottoming at an average $43 a barrel in the first quarter….
“Prices are coming down because demand is,” said Robert Ebel, a senior adviser on energy and national security at the Center for Strategic and International Studies in Washington. “There’s no way of knowing how long this will continue.”
U.S. crude-oil supplies rose for a ninth week, the longest stretch since April 2005, the Energy Department said Nov. 26. U.S. fuel demand declined the most in 27 years in the first 10 months of this year, the American Petroleum Institute reported Nov. 18….
Oil prices may fall more as world growth slows, Fatih Birol, the IEA’s chief economist in Paris, said in an interview Nov. 27.
Note the information was strikingly on the downbeat side (f you are long oil or oil stocks). The one genuinely positive viewpoint:
Barclays Plc says crude will trade at $72.10 next quarter and average $100.50 for 2009, according to a report Nov. 21.
Oil exporting nations WANT higher prices, but that does not mean they will GET higher prices near term:
Oil producers are depending on crude prices to support spending programs. Venezuela, the largest oil exporter in the Western Hemisphere, estimated an average price of $60 a barrel for its 2009 budget. The Latin American country depends on oil for half its public spending and more than 90 percent of exports.
Russia‘s 2009 spending plans are based on a forecast of $95 a barrel of Urals crude, and Finance Minister Alexei Kudrin said Sept. 16 the budget will break even next year if the price of oil averages $70 a barrel. Urals crude, Russia’s benchmark blend, was last priced at $49.60.
The reason this article stuck out was that I got the sense of an undertone of funk, which is unusual in a Bloomberg piece (the Reuters report, by contrast, were predictably anodyne). That may simply be a post-OPEC-dud-meeting overreaction by some of the sources,