From today's FT:
Oil price fall puts projects at risk
ft.com
From yesterday's:
View of the day: Opec and oil
Thomas Stenvoll, energy strategist at UBS
Published: September 10 2008 21:28 | Last updated: September 10 2008 21:28
Opec’s decision to reduce crude oil production “points to a line in the sand being drawn”, according to Thomas Stenvoll, energy strategist at UBS, who says the move will provide the perfect backdrop for a renewed bull market in oil.
Mr Stenvoll says Opec’s decision to act, as the price of Brent crude sank below $100 a barrel on Tuesday for the first time since February, was significant – not least because it supports suggestions that $90 to $100 a barrel is now an effective price floor for the cartel’s members.
“At $100 a barrel, the organisation is willing to act to shore up prices,” says Mr Stenvoll. “For a market where the bears have been firmly in control, the actions by Opec are also highly significant in that they provide a much-needed catalyst to turn price action in the months ahead.”
UBS says crude oil stocks in the developed world are unlikely to rise in the third quarter because of production losses in Azerbaijan (partly a result of the war in Georgia) and output lost in the Gulf of Mexico because of hurricane Gustav.
Mr Stenvoll also says lower Opec production in the fourth quarter will “challenge” inventories, but it will take time for oil prices to respond as the market needs to see action from Opec that will enforce its new position.
“Opec’s actions do matter, and with the latest decision they provide a solid foundation for oil fundamentals well into 2009,” Mr Stenvoll concludes. |
