Friday November 14, 2008

NYMEX crude oil prices rebound after fall to $54.67, OPEC to discuss further production cut

bloomberg.com :

NYMEX crude oil prices rebounded from the 21-month low touched yesterday [13 Nov 2008], as equities advanced and amid speculation a 10% drop in prices the previous two days wasn't justified. Futures touched $54.67, the lowest since 30 Jan 2007, when IEA slashed its 2009 oil-demand forecast by the most in 12 years amid deteriorating global economic growth. Prices have tumbled 60% since reaching a record $147.27 on 11 July 2008. OPEC plans to meet in Cairo on 29 Nov 2008 to discuss a further production cut. OPEC earlier decided at a meeting in Vienna to cut the production target for 11 of the group's members by 1.5 million barrels a day.

- The peakoilers are already having fun with a new "How low can crude oil go?" thread. However, in the mid to long term, this is no laughing matter as tar sands operations require between $80-100 oil to continue operations, and some producers like Iran and Venezuela require $70-80 oil to break even (which kind of explains why these have been the ones yelling the loudest for another OPEC production cut).

Already Shell and other Canadian oil sands operators are putting off expansion plans. The race is on between a contracting economy and contracting oil production. It's a race to the bottom to see which will shrink faster. Will the oil depletion rate shrink faster at IEA's 9.1%, or will the ongoing Global Economic Collapse / Second Great Depression mean that the economy will shrink faster than 9.1%? Or will oil production and the economy follow each other down a death spiral? For most of the people involved in the global economy, this is *Not A Good Thing* (TM).

See also :

1. NYMEX crude oil price falls below $90 as credit crisis deepens in Europe
2. NYMEX crude oil drops below $80 as financial market meltdown continues
3. NYMEX crude oil falls for the third day to below $72 on recession concern
4. NYMEX crude oil drops below $60 on demand destruction concerns

(2008-11-14 17:20:25 SGT) [Energy] Permalink

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