Wednesday, 8 April 2009

Up Where We Belong - Joe Cocker & Jennifer Warnes (1982)

How soon might the price of crude oil go back up to over $100? It may be a matter of understanding supply dynamics just as much, if not more so than demand ones in a downturn.

Some argue that once the global economy is back on track, perhaps in 2011, the barrel will again break the “century” barrier.

According to The Globe and Mail, OPEC’s response to curtail production which if maintained, will tighten supply by approximately 330 million barrels for 2009 and may raise the price by so much. But it is the non-OPEC countries like Canada that are postponing or curbing new oil sands and deepwater field projects which are not profitable at today’s prices. They would be more so at around the $70 mark so market forces will need to boost prices before any further investment takes place. This potential supply, or lack thereof, may factor in as well and in the end, getting to $100 might very well be a self-fulfilling prophecy.

What do you think?

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