Lower Demand and Falling Oil Prices Unlikely to Prompt OPEC Action: Abraham
Energy Report
WASHINGTON, Oct. 6 /PRNewswire-USNewswire/ -- The Abraham Energy Report today
issued a special report to subscribers providing analysis on falling oil
prices which dropped below $88 a barrel on Monday.
A special Web-only bulletin from the Abraham Energy Report
(AbrahamEnergyReport.com) advises subscribers that falling oil prices are due
to the slowing world economy and unprecedented lower demand but "it doesn't
seem likely that OPEC will take concerted action to defend prices at this
time."
The current price collapse is a symptom of the slowing economy. "Oil prices
during the last two weeks have reflected the growing perception that the U.S.
and European economies are dragging the global economy into recession and a
major slowdown in macroeconomic activity," the Report said.
The Report also noted that the drop in demand is unprecedented. "Final
monthly numbers for U.S. oil demand, released by the U.S. Department of
Energy's Energy Information Administration last week, were revised downward
again for the seventh straight month in a row. Total U.S. petroleum demand for
July is now down by 1.355 million barrels per day (mmbd) from a year ago, to
the lowest level in 11 years for the month of July, which was also the month
when oil prices hit their intra-day high of $147.27 per barrel.
"Other recent data releases show Japanese oil demand down by nearly 9 percent
in August, with gasoline demand down by 14 percent; UK demand was off by 4
percent in July, with gasoline down by nearly 10 percent. If these trends
continue in the last part of the year, global oil demand growth for 2008 may
turn out to be only 0.5 to 0.6 mmbd, the lowest in a decade.
"U.S. gasoline prices at the end of September were down more that $0.80 per
gallon from their peak. Crude oil at $90 per barrel is still almost $20 above
the average price for 2007 and $10 higher than prices at this time last year.
Despite recent falling prices, the Abraham Energy Report stands by its latest
forecast that "prices are likely to trade in the $95 to $115 per barrel range
most of the time in the coming months. There may be occasional excursions
below $90 or above $120 per barrel, but they are likely to be short-lived."
With lower crude prices and demand destruction, many observers are closely
watching the response from OPEC. But the Report tells subscribers to expect a
cautious approach. "OPEC ministers have been relatively quiet lately, judging
from press reports. Part of this may be due to the fact that September was the
holy month of Ramadan, and part of it has to do with the rapid development of
the global financial crisis.
"It doesn't seem likely that OPEC will take concerted action to defend prices
at this time. Saudi Arabia has a long-term interest in maintaining strong
global oil demand, and has repeatedly demonstrated its willingness to buck the
OPEC majority to defend its interests.
"We believe many members of OPEC have a strong interest in being part of a
collective solution, rather than part of the problem."
The Abraham Energy Report's analysis by Contributing Editor John Brodman is
available on its Web site at AbrahamEnergyReport.com
About the Abraham Energy Report
The Abraham Energy Report is a new subscription-based monthly newsletter,
which offers a unique blend of timely and exclusive insights into global
energy markets coupled with sharp analysis of geopolitics and energy policy.
The Report's publisher and editor is former U.S. Energy Secretary Spencer
Abraham who currently serves as chairman and CEO of The Abraham Group LLC in
Washington, D.C.
Abraham Energy Report
Media Contact: Joe McMonigle 202-393-4673
More information: AbrahamEnergyReport.com
SOURCE Abraham Energy Report
Joe McMonigle of Abraham Energy Report, +1-202-393-4673
