OPEC looks to cut supply again to stop oil price slide

Dennis M. — Wed, 19 Nov 2008 04:56:01 +0000

OPEC has decided to have another extraordinary meeting this month in an effort to keep recessionary demand from sending prices even further down toward $50 per barrel. The meeting will be November 29th in Cairo in conjunction with an Organization of Arab Petroleum Exporting Countries gathering. OPEC’s president, Chakib Khelil, says OPEC plans to defend the price band of $70-$90, but the key question is will Saudi Arabia be willing to cut production enough to make that a reality. Price hawks like Venezuela and Iran would like to lower OPEC production another 1-1.5 million barrels per day (Mbd) but Saudi Arabia hasn’t yet complied fully with the last 1.5 Mbd cut.

The desperation of OPEC to cut further even as winter heating begins leads me to think many analysts at Morgan Stanley and elsewhere may just be right that global oil demand will fall in 2009 for the first time in more than 20 years. The climate change implications would be a much slower growth in global greenhouse gas emissions for the year, giving hope that we can begin to lower global emissions within the next decade.

The EIA weekly oil report coming out tomorrow will shed some light on whether US inventories remain strong as the winter commences (I saw my first few snow flurries here in New York City today). I will report fully on its insight and other major energy and climate news of the day tomorrow afternoon.

Onwards to a sustainable energy transition-

Developing Models that Fit Oil Price Swings

Dennis M. — Sat, 26 Jul 2008 01:42:58 +0000

I spent much of the day working on a model that pulls the relevant variables of the oil market together to have predictive success for the prices of the last decade and a half. Once the model comes together, it will hopefully give some insight on the trajectory of prices for the next decade and a half. I believe this is absolutely crucial and seriously missing. The EIA, World Bank, CERA and many other mainstream modelers of oil prices have been woefully incorrect in their past predictions, and it makes policymakers largely blind as they try to put together energy strategies for the future. I aim to publish the report in August/September and make them available for a small fee to help cover the labor costs of the project.

Right now I am going through information reported by the BP Statistical Review of World Energy over the years to estimate the relationship between demand and supply and corresponding price shifts. I am putting together reasonable estimates of demand and supply through 2020 on a country by country basis and would welcome your input if you have worked on similar endeavors. My priority is to produce a document that is completely transparent in its assumptions and that is malleable for folks to play with and produce predictions of future prices, with the end result being a more informed public and elected leadership that can better plan our energy future. Congressional discussions about the potential of drilling in ANWR, off our coasts, and on currently leased land too often fantasizes about huge production increases domestically when the truth is depleting fields have been the dominant force in US production for almost forty years and there is little chance that will change. The report hopes to chart out the potential savings of oil demand reduction through efficiency and renewables substitution by generating different prices based on different demand and supply scenarios. The past two weeks show that demand reduction can have an effect on oil’s price, and here’s hoping we can accelerate our efforts so that they work during periods of economic growth and not just in recessions. Please be in touch if you have suggestions for the report during its production over the next few weeks.
Onwards to sustainability!
Dennis

SET Energy » oil price

OPEC looks to cut supply again to stop oil price slide

Developing Models that Fit Oil Price Swings