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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Archie Meeties who wrote (26870)	11/4/2003 11:53:33 PM
From: quehubo	Respond to of 206085

Yes, if the economy does not keep growing and we have a mild Winter the oil markets may hit a speed bump. Oil producers may need a scare to bring Russia, Mexico and Norway to the table.

To: Archie Meeties who wrote (26870)	11/5/2003 7:37:16 AM
From: Ed Ajootian	Respond to of 206085

Arch, The article is pretty consistent with other stuff I've seen. Based on how OPEC has behaved over the last 4 years or so, I have little doubt that they will do what is in their best interests for the short term and pull down production by a million or so barrels a day next year in order to prop up prices. This would be especially likely if the dollar stays as low as it is currently. The open question for '04 is what Iraq will be able to produce. Not sure what assumption regarding this was used in the article. It does not seem to me that Iraq will be able to increase its production very much due to continued sabotage of its infrastructure.

To: Archie Meeties who wrote (26870)	11/10/2003 11:59:35 AM
From: Ed Ajootian	Respond to of 206085

Energy Economist - Monday, November 10, 2003 Issued 2 - 3 times per week. We seek out economic and political news that has the potential to impact energy prices. Market Watch The current situation sends analysts running to the dictionary in search of synonyms for uncertainty. As you have no doubt heard by now there was a bombing at a residential compound in Saudi Arabia. You may also have noticed news of another pipeline bombing in northern Iraq. What if it had been the other way around with the pipeline bombing occurring in Saudi Arabia and the compound bombing in Iraq? The result would be disastrous for energy intensive economies. There is no excess capacity outside of OPEC. With high prices non-OPEC producers pump as much oil as they can. Even when prices are low there is seldom more than 500,000 barrels of spare capacity outside the confines of OPEC. Within OPEC, six of the OPEC 10 are producing at capacity and of the four members with spare capacity Saudi Arabia has 80 percent of the excess. From a global security standpoint Saudi Arabia defines the point of greatest risk. If a pipeline attack occurred in Saudi Arabia and as little as 10 percent of its production was halted there is not enough capacity in the rest of the world to make up the difference. If all Saudi production was off the market the worst predictions of the most pessimistic would turn out to look conservative and release of crude from government reserves would only have a modest impact on the ensuing price spike. We are not predicting an attack or revolution within Saudi Arabia with such devastating consequences but nether can we rule one out. Our other major risks on the upside to oil prices are civil unrest in Venezuela associated with the upcoming recall vote, if it is allowed to happen, and ethnic conflict in Nigeria. Meanwhile OPEC members are worried about the downside risk. December 4, 2003 OPEC is scheduled to hold its 128th meeting in Vienna, Austria to review oil markets. The focus will be on production cuts to coincide with the seasonal drop in 2nd quarter petroleum demand. Total petroleum demand (crude, condensate and natural gas liquids) will drop off by close to 3 million barrels in the 2nd quarter following the winter heating season. If the OPEC 10 do not reduce production there will be downward pressure on oil prices. The OPEC 10 must not only reduce production to compensate for lower second quarter demand but must also compensate for any gains in Iraq. If it does not adjust for lower demand OECD inventories will move into the normal range and OPEC will lose some of its leverage over prices. Nonetheless, its hard to come up with a price scenario below $25 per barrel in the first half of 2004. Libya is asking for a higher quota and may request it at the upcoming meeting. Algeria and Nigeria also want an increase. Venezuela will be defending against a lower quota even though its current capacity is 10 percent below quota. Indonesia is so far below quota that its opinion will hold little weight. We doubt that the issue will even be addressed on December 4. It will be too difficult to deal with before some stabilization in Iraq. ******************************************************** From wrtg.