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URL:  https://boards.fool.com/ref-crude-predictions-long-term-sorry-for-my-10188171.aspx

Subject:  Re: Day rates Date:  5/24/1998  6:43 AM
Author:  ppkimman Number:  828 of 14486

ref.: crude predictions - long term

Sorry for my long absence from Thread, but a virus wiped out the harddisc and PC was away for repairs.

I think what we tend to forget (and I admit this is from a products trader, not an E&P guy) is that the markets in crude + crude products are one of the most transparent and widely traded of commodities in the world.
Just as an example: on the Exchanges, daily crude volume traded is easily in range 175-200 million barrels per day (!), well over the daily global consumption of about 75 million barrels. Add to that the trade in petr.products (distillates,fuel oil,gasoil,mogas) and you have huge volumes traded on a truly global and very transparent market.

A result of this situation as described is that trading goes on in almost 24 hour fashion. The prices are really a function of what goes on in the markets for the next few weeks, perhaps next 1-2 months at most, and are basically set by simply the balance between supply and demand.
No trader is really concerned, nor SHOULD he be concerned, about a price prediction for the year 2000-whatever, nor is a trader(read: the market) concerned what it cost company ABC to get the stuff out of the ground and refine it.
The crude market knows that today, as a matter of fact, there is too much crude chasing too few customers and this scenario is very likely not going to change in the next 3-6 months. Some say, and I do believe the same, that this scenario is very likely to stay with us for the next 3-5 years and thus crude prices will remain in this time frame at the range $11-15 as earlier mentioned. No other long term factors are really going to impact the prices: its the demand/supply driving the markets, and especially the demand/supply balances for the very short term.
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