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Politics : Foreign Affairs Discussion Group
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To: Michael Watkins who wrote (150379)11/2/2004 7:51:53 AM
From: Keith Feral  Read Replies (1) of 281500
 
I was wondering what the profit taking in oil was telling us. Did it have to do with the election or the improved outlook for oil supplies? Does the outlook for XOM's Sahkalin oil project in Russia begin to improve the outlook for non OPEC oil sources? 2.8 billion barrels of crude and 17 trillion cubic feet of lng is a starting point. However, those supplies will not be available for 3 more years. That being said, Russia is the number 2 oil supplier in the world behind Saudi Arabia. They are pumping 7 million barrels of crude per day. With more Russian pumps being activated in the next few years, Russia could topple the Saudis as the leading energy producer of the world. The biggest trouble for Russia is building the pipelines to get the oil and gas to their destinations.

I am very comfortable with crude prices at $50 a barrel. I would tend to think oil prices are going to follow their own pathway from here. Most of the hard work has been done by the Bush team. I think the long term range will end up between $45 to $60 a barrel. Of course, if the supply chain improves even further with the high price of crude attracting so much attention, perhaps the price of energy could retract below $40 over the long haul.

I don't know why the dollar would fall under a Bush win. The path for higher interest rates will continue to boost the value of the dollar.

Gold is a substitute for risk. If the new government in Iraq is successful, the Middle East will be less risky going forward. I think the use of oil for bribes is much more of a reality in the middle east than gold. Why bother with transacting in gold when they can use very expensive crude vouchers to finance illegal activities?

I think the whole profit taking shift may be a recognition that Kerry cannot screw up the mess that Bush has cleaned up.
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