Commerzbank: Oil Below $100 Per Barrel In 2009

by William C Montgomery

June 12th, 2008 4:17 PM

commerzbank oil below 100 per barrel in 2009

Commerzbank (Frankfurt, Germany) senior commodity analyst Eugen Weinberg joins the growing chorus of finance gurus predicting the popping of over-inflated oil prices. Weinberg sees oil dropping below $100 per barrel in 2009. His crystal ball also tells him that crude prices haven't yet quite hit their peak in this rally. He expects the price of oil futures contracts to collapse only after soaring to $150 and $170 in the next three months. Who's to blame? Weinberg say, "The trigger for this extremely fast-growing bubble is above all the poor performance of other investment classes, like stocks, bonds and property." (I swear, Herr Weinberg must read TTAC!) I guess this means that I'll keep my Jeep parked and drive the Honda until next spring. Over to you, Stein…

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Phil Ressler on Jun 14, 2008

"Do you like good music? Yeah, yeah..." Excellent video. I grew up near coal mines in a house heated by coal; went to college in a coal mining area with sons and daughters of coal miners; knew coal miners; worked with Democratic Party UMW members in the 1972, 1974 and 1976 political campaigns; I've been in a coal mine. Mining coal is a difficult, dirty, even nasty business. Guess what? Coal is going to be mined for generations to come. Phil

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Mdf on Jun 14, 2008

casper00: “Saudis to increase oil production by half-million barrels” per day [...] The meeting hasn't happened yet, but what else can they realistically offer? http://www.arabnews.com/?page=6&section=0&article=110870&d=14&m=6&y=2008 Arab News is surprisingly bereft of oil related items -- probably the message is "there is more to Saudi Arabia than smelly, black sludge" -- but the general tone has been "What the hell is the matter with our customers?!" For example: http://www.arabnews.com/?page=6&section=0&article=110257&d=26&m=5&y=2008&pix=business.jpg&category=Business Long term, the Saudis are more frightened than your average North American SUV owner, the unease notching up with each HEV, PHEV, or BEV announcement. http://www.motortrend.com/features/consumer/112_0705_james_woolsey_interview/index.html "I had a conversation with a senior Saudi who said that cars getting 500 mpg are going to ruin his country. I told him we don't want to ruin Saudi Arabia, but we do think maybe you ought to get some other work." It won't happen overnight, but it is increasingly clear that North America is realizing they don't need all that oil to maintain the usual standard of living. But today the #1 priority is simple market stability. The physics of the situation are with OPEC, but the psychology is against them. So they must increase production ... but tempered by the fact that the Saudis (and OPEC in general) have been caught with their robes open in the past, when demand dropped while production was high, and would prefer not to make the mistake again. P.S. I've only been at TTAC for a few weeks now, and this has been the most interesting thread yet. Aim all the incoming doomers at it!

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Pch101 on Jun 14, 2008
Nothing of major significance was discovered in the last decade or 3. Your dismissal that it doesn’t mean something major will be discovered in the future is meaningless in the practical world. We don’t have time, we need oil now. If we don’t get it our life as we know it will come to a halt. Even exploration presupposes a viable energy source. That's fairly alarmist. For one, with demand increasing at a pace of 1% or less, and with that figure falling, there isn't much of a problem. Adjustments to demand are happening as we speak, and our global economic downturn is going to push it down further still. For another, the oil industry was not particularly eager to invest a lot in exploration and alternative technologies with oil at $15 per barrel, it just wasn't worth the bother. Now that oil prices have gone up, this is changing. Here's one example: Between 2000 and 2005, Shell invested an average of about $8.5 billion per year in exploration activities. During the last two years, that figure has increased to an average of $14.7 billion. The higher prices have encouraged them to look for more oil, so they have increased their spending accordingly. The other major oil companies are increasing their expenses in a similar fashion. When there is money to be made in it, they jump in with both feet. When oil is cheap, they are less inclined to put nearly so much into it. Judging the present situation based upon activities undertaken when oil was cheap is going to lead to excessively conservative conclusions. It is true that we are running out of the low hanging fruit of oil reserves, so the costs of extraction are bound to go up and cause prices that are above the old prices. The days of $15 oil are probably long gone. But that doesn't mean that $135 is here to stay. It's quite the opposite -- it's an blatant aberration that doesn't correlate with the norm.

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Cleek on Jun 14, 2008

I'm not in a position forecast oil prices, but me thinks that crack is cheap and plentiful in Frankfurt.

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