Everything depends on the Saudis
- Conoco Inc., Houston, TX (US)
This paper reports that oil markets are at their lowest level in 18 months, since before the Persian Gulf crisis. What is remarkable is that the world oil industry is producing essentially at capacity, yet OPEC shows no sign of taking advantage of this situation to drive up prices. Rather, commodity market forces are quickly exploiting any short-term surplus or shortage, and the oil market is exposed to continuing price volatility. Oil market uncertainties - the return of Iraqi and Kuwaiti production, prospects for exports from former Soviet republics, and the fragility of economic recovery - appear bigger than normal and threaten to oversupply markets in the spring when oil demand declines seasonally. The downward trend in world oil prices that began in November may continue into the second quarter of 1992. However, by the second half an economic recovery may be underway. If that happens, demand should grow and the market firm. At any rate, prices in 1992 may be more stable than commonly expected, because Saudi Arabia does not seem to want prices much above or below 1991 levels. That would be a range of $20 - $21 for WTI.
- OSTI ID:
- 5847104
- Journal Information:
- World Oil; (United States), Vol. 213:2; ISSN 0043-8790
- Country of Publication:
- United States
- Language:
- English
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