Article: Oil 'will hit $100 by winter'

jetflyer

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LINK: http://observer.guardian.co.uk/business/story/0,6903,1519745,00.html

Oil 'will hit $100 by winter'

[font=arial,helvetica,sans-serif]Worst-ever crisis looms, says analyst · Surging demand to keep prices high


[font=Geneva,Arial,sans-serif]Heather Stewart, economics correspondent
Sunday July 3, 2005
The Observer

[/font][font=Geneva,Arial,sans-serif]Oil prices could rocket to $100 within six months, plunging the world into an unprecedented fuel crisis, controversial Texan oil analyst Matt Simmons has warned.


After crude surged through $60 a barrel last week, nervous investors were pinning their hopes on a build-up in US oil-stocks to depress prices in the coming months.

But Simmons believes surging demand will keep prices bubbling well above $50. 'We could be at $100 by this winter. We have the biggest risk we have ever had of demand exceeding supply. We are now just about to face up to the biggest crisis we have ever had,' he said.

Opec producers held emergency talks last week to consider making their second 500,000 a barrel increase in production quotas in a fortnight: but the discussions were suspended last Thursday after prices dipped back below $60.

The looming oil crisis is not high up the agenda at this week's G8 meeting, although the heads of state are expected to repeat their finance ministers' call for greater transparency from Opec and other oil-producing nations about their reserves.

However, global warming is one of Britain's two major priorities, and Tony Blair hopes to secure a pledge to pour more cash into developing alternatives to the oil-intensive technologies that cause climate change.

Simmons believes such moves will be too little, too late. He will publish a hard-hitting book this week in which he argues that Saudi Arabia, the world's largest producer, is running out of oil, and further price rises are inevitable as supplies decline. He warns that the scramble for resources could eventually descend into war.

Many analysts expect extra production over the next year, as high prices boost investment by energy firms. But Simmons says after many years of underinvestment, there is even a shortage of drilling rigs.

'Many of these projects are aspirations; many of them won't create peak production in the first year, and many of them within five years will be in decline,' he said.

However, the Economist Intelligence Unit predicts that oil prices will peak by the end of this year, and decline by 10 per cent in 2006 as the Chinese economy slows, reducing demand. Chinese imports have been crucial to propping up the oil price in the last two years.

But the EIU warned that its forecasts - which show a 30 per cent increase in oil prices for 2005 - could prove too conservative if there are further wobbles in supply. 'The narrow margin of spare production capacity has made prices vulnerable to unforeseen reductions in supply or rises in demand,' it said.

Paul Horsnell, head of commodities analysis at Barclays Capital, said supply constraints would continue to bite for the rest of the year. 'It's all getting a bit tight'

Brent crude closed almost $2 a barrel higher in New York on Friday night, while futures contracts for heating oil, widely used in the US, hit a record high, which analysts said was unusual for summer. 'It's fear,' said Kyle Cooper, an analyst at Citigroup. 'It's not based on what is happening now. It's based on fear of what could happen.'
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Let's hope the Energy policy that is being worked on in the House and Senate helps!! :) Airlines are going to need some help.

American, Delta, Northwest, United, Airtran, Southwest, US Airways, America West, Continental, Frontier, Alaska, Jet Blue, Comair, ASA, Skywest, Pinnacle, Mesa, etc. are all going to hurt if this comes true.

I think we should just nuke the Chinese. BOOM, no SUPPLY PROBLEM:)
Well, I guess that would make for a lot of empty toystores and Walmarts. OH WELL.

Jet
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pilotpayne

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Nice article, seems to promote his book very well. All the doom and gloom does it ever end? While I think we do have problems this is just getting old.....
 

h25b

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Most of the reason oil prices are so high is thanks to these so-called "analysts."
 

jp1030

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T Boone Pickens is also predicting oil wi be at $100 a barrel. He's been very accurate in his predictions on prices. He is convinced this rise is due to fundamentals not speculation.

JP
 

jetflyer

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This runup in prices is justified and purely driven by fundamentals.

There are justified worries about production (SUPPLY) increases NOT BEING ABLE TO KEEP UP WITH DEMAND in the future.

This article below quoting an Iranian analyst from MID-JUNE says there will be a 2 MILLION BARREL PER DAY SHORTAGE IN THE FOURTH QUARTER! This has not happened since the OIL EMBARGO in the early 1970's.

He thought in mid June oil would probably go to around $60 by the fourth quarter. Well he was right but it hit $60 1 1/2 weeks after he was quoted!!

Let's hope the $100.00/ barrel doesn't become a reality.

Read this from an Iranian analyst:


Iran Analyst Says Oil Output Won't Meet 4Q Demand -Report

TEHRAN -(Dow Jones)- Global oil producers will fail to meet rising oil demand in the fourth quarter, sparking oil price rises of up to around $60 a barrel, an Iranian oil analyst said Wednesday.

Mohammad-Ali Khatibi, director of the Tehran-based International Center for Energy Studies' OPEC research office, told the Pars news agency that OPEC and non-OPEC producers wouldn't be able to meet demand in the fourth quarter.

The official, from a center affiliated to the oil ministry, said current production of 85 million b/d would be surpassed by projected demand rises to 87 million b/d in the fourth quarter, leaving producing countries having to pump an extra two million b/d, which they won't be able to do.

Khatibi also said the lack of spare refining capacity in oil-consuming countries sparks more instability in global crude markets than the lack of spare production capacity by OPEC and non-OPEC producing countries.

To bring stability to the market, producers need around up to 4 million b/d in additional production capacity, due to increasing demand, he said.

"But the absence of refining capacity to cover any new production will intensify spiraling global oil prices," he said in response to the reasons underlying growing oil prices.

Khatibi said the rise in oil prices of up to $60/bbl is likely by the winter.

Whatever the decision by ministers of the Organization of Petroleum Exporting Countries today, there will be no tangible drop in oil prices, he said.

-By Hashem Kalantari, Dow Jones Newswires, +9821 896 6230
HERE IS THE LINK:
http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20050615\ACQDJON200506150721DOWJONESDJONLINE000635.htm&selected=9999&selecteddisplaysymbol=9999&StoryTargetFrame=_top&mkt=WORLD&chk=unchecked&lang=&link=&headlinereturnpage=http://www.international.na

Let's hope they aren't right. There will be a shortage of oil though really soon. Let's hope the buildup in crude inventories are enough to counter the shortage.

Jet
 
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General Lee

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At a certain point people will stop buying gas and stop driving their own cars. That will bring the supply back. Mass transit will be full, and the fare hikes will stick with the airlines if $100 barrel hits. And, T Boone would really love it if it got to $100 a barrel. He wouldn't say otherwise. The Iranian Opec leader is saying this to hurt the US for US policy decisions. The Saudis continue to say that there is NOT a supply problem, but a lack of refineries in the US. This is a bunch of BS.


Bye Bye--General Lee
 
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lowecur

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General Lee said:
At a certain point people will stop buying gas and stop driving their own cars. That will bring the supply back. Mass transit will be full, and the fare hikes will stick with the airlines if $100 barrel hits. And, T Boone would really love it if it got to $100 a barrel. He wouldn't say otherwise. The Iranian Opec leader is saying this to hurt the US for US policy decisions. The Saudis continue to say that there is NOT a supply problem, but a lack of refineries in the US. This is a bunch of BS.


Bye Bye--General Lee
You smart man there GL! Supply and Demand set oil prices, and the world economy cannot sustain $100 per barrel. Oil speculation is driving the price in it's present range. You will note that the speculators back off at $60 because they don't want to bite the hand that feeds them......a healthy economy. The only way it goes to $100 per barrel is a major interruption due to sabotage or war.
 

h25b

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General Lee said:
At a certain point people will stop buying gas and stop driving their own cars. That will bring the supply back. Mass transit will be full, and the fare hikes will stick with the airlines if $100 barrel hits. And, T Boone would really love it if it got to $100 a barrel. He wouldn't say otherwise. The Iranian Opec leader is saying this to hurt the US for US policy decisions. The Saudis continue to say that there is NOT a supply problem, but a lack of refineries in the US. This is a bunch of BS.


Bye Bye--General Lee
This is correct, everyone hyping $100/barrel oil has other motives. I realize that we're talking about a finite resource here, but I think the only instability in the market right now is created by the bottle-neck at the refineries. For that we can thank the tree huggers.
 

JohnDoe

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quote:

"You smart man there GL! Supply and Demand set oil prices, and the world economy cannot sustain $100 per barrel."

Alot of people seem to forget or ignore this point. Do you really think that everybody's economy around the world wouldn't be affected by $100 per barrel oil? I don't care if you are double-digit growth China, the US, or whomever. If oil hits $100 per barrel (or more), demand will start to fall through the floor, and most of us know what will happen to prices at that point.

Seems that alot of the $100 or more per barrel crowd have something to gain by it. Not saying that there isn't going to be a problem at some point. We definately need to stop working on "band-aides" to the current oil "problem" and develop real fixes via new sources.


P.S. jetflyer: Enough of the frickin oil and gas threads already! Between you and Atpcliff, there is a new thread started every week about it. Use the same thread you paranoid heart-attack-waiting-to-happen. I don't see how you sleep a wink at night.
 

jetflyer

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lowecur said:
The only way it goes to $100 per barrel is a major interruption due to sabotage or war.
Lowecur,

What about a major interruption, like NATURAL RESOURCE DEPLETION??


Read about the SEVERE OIL PROBLEM that will strike soon from this transcript below with visual-aids included from a speech by REPUBLICAN Maryland Congressman ROSCOE BARTLETT to the HOUSE on MAY 3, 2005 on PEAK OIL:
http://www.energybulletin.net/5948.html


Roscoe Bartlett actually just had a meeting with President Bush THIS LAST WEEK about this PEAK OIL PROBLEM as well. This press release is posted on the Congressman's website: http://www.bartlett.house.gov/latestnews.asp?ARTICLE2900=7308



Lowecur,
Peak Oil would cause a MAJOR INTERRUPTION even more than sabotage or war.
I personally think we're still about 2-5 years from GLOBAL PEAK OIL.
U.S. peak oil by fact was 1970. The U.S. peaked at about 10 million barrels/day in 1970 and now even with the Alaska North Shore oil and Gulf of Mexico drilling the U.S. only pumps about 5 million barrels/day and it declines yearly. www.yubanet.com/cgi-bin/artman/exec/view.cgi/8/15426

This decline will happen to world oil someday. Maybe it's 10-20 years away. I don't think so, but even then "HOUSTON, WE HAVE A PROBLEM".

Airlines need to hedge their fuel at the CHEAP $60/barrel now while they can. I'm with Comair and worried about this. Can Delta not get hedges?? Can they just not get the financing?? If they sell Comair and ASA, I think they should dump ALL the money on fuel hedges. Then while other airlines are paying $80+ atleast Delta will be buying at $57-60. Then with the fuel surcharges added to ticket prices, maybe they can make money.

There is a DELTA PILOT member of www.PEAKOIL.COM that started a thread recently there saying that he sat through a recent public meeting of Delta Management. He said they were confused by this "FUEL THING". He said they seemed clueless to the OIL PROBLEM facing the world. The Delta pilot said he was shocked even the leaders of the #2 airline in the world were IGNORANT to PEAK OIL.


Jet
 

h25b

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jetflyer,

You're probably like all of these analysts betting on huge price increases... We get the point already. You subscribe to this theory. MOVE ON ...
 

Paul R. Smith

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jetflyer said:
Lowecur,

What about a major interruption, like NATURAL RESOURCE DEPLETION??


Read about the SEVERE OIL PROBLEM that will strike soon from this transcript below with visual-aids included from a speech by REPUBLICAN Maryland Congressman ROSCOE BARTLETT to the HOUSE on MAY 3, 2005 on PEAK OIL:
http://www.energybulletin.net/5948.html


Roscoe Bartlett actually just had a meeting with President Bush THIS LAST WEEK about this PEAK OIL PROBLEM as well. This press release is posted on the Congressman's website: http://www.bartlett.house.gov/latestnews.asp?ARTICLE2900=7308



Lowecur,
Peak Oil would cause a MAJOR INTERRUPTION even more than sabotage or war.
I personally think we're still about 2-5 years from GLOBAL PEAK OIL.
U.S. peak oil by fact was 1970. The U.S. peaked at about 10 million barrels/day in 1970 and now even with the Alaska North Shore oil and Gulf of Mexico drilling the U.S. only pumps about 5 million barrels/day and it declines yearly. www.yubanet.com/cgi-bin/artman/exec/view.cgi/8/15426

This decline will happen to world oil someday. Maybe it's 10-20 years away. I don't think so, but even then "HOUSTON, WE HAVE A PROBLEM".

Airlines need to hedge their fuel at the CHEAP $60/barrel now while they can. I'm with Comair and worried about this. Can Delta not get hedges?? Can they just not get the financing?? If they sell Comair and ASA, I think they should dump ALL the money on fuel hedges. Then while other airlines are paying $80+ atleast Delta will be buying at $57-60. Then with the fuel surcharges added to ticket prices, maybe they can make money.

There is a DELTA PILOT member of www.PEAKOIL.COM that started a thread recently there saying that he sat through a recent public meeting of Delta Management. He said they were confused by this "FUEL THING". He said they seemed clueless to the OIL PROBLEM facing the world. The Delta pilot said he was shocked even the leaders of the #2 airline in the world were IGNORANT to PEAK OIL.


Jet
so if this Whole thing comes to pass..what good is 60/barrel fuel hedging gonna do anybody...Buy em a year or two, then what..Charge 2000.00 for a PHL-LGA flight? So is that what the market will bear?..or is it bare?
 
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