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Politics : High Tolerance Plasticity
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To: energyplay who wrote (8617)9/25/2001 9:51:21 PM
From: Raymond Duray  Read Replies (1) of 23153
 
Hi ep,

Re: Those of you who have the answers, please post. Even one answer would be appreciated....

OK, I'll take a crack at $/bbl crude awl. Generally it's been my experience that a 1% imbalance in supply/demand results in a 50% move in price. Let's say that the events of Sept. 11 took us from somewhere near a balanced market to a position where we have a 2% shortfall in demand over the next few months. OPEC has decided not to cut back immediately to match the new demand curve and crude in transit is likely to skyrocket, exceeding the refiner's capacity to ship product. Starting with a $27 base price per barrel, 3 cuts of 50% each would bring us to ($27.00/2)/2= $6.75/bbl by February, unless supply is curtailed. This I would expect would be the outside estimate for a spike down in price without intervention on the part of OPEC and other producers. More likely, IMO, would be the low teens for crude by mid-winter, due to continuing anemic demand in the face of lowered supply.
NOAA weather projections, though suspect, don't anticipate the same severe weather the U.S. experienced last November and December. And reversing to course of cancellations on air transport and vacation/convention business will take a few months at least.

Just a speculation thrown out to see what some of the really smart observers here think of the possibilities.

R.
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