[interact_list] [attacks on US] oil price could fall, coming recession can be that hard

  • From: Akio Fujita <A.Fujita@xxxxxxxxxxxxxx>
  • To: interact_list@xxxxxxxxxxxxx
  • Date: Mon, 17 Sep 2001 21:20:44 +0100

If war starts - well, US stock can fall more, cause no one thinks 
its Afghan invasion can be that successful - and it can spark more 
terros at US or elsewhere. 

And it is forecasted that 'global recession' can be hard enough 
'no one really needs oil' - so price can fall, even supply go unstable 
or reduced. (Opec promises it will keep supply meeting upto demand.)

That bad? - it looks day by day, it's goin bad, at almost everywhere. 
By Thursday or this weekend, US's action can be decisively taken.


US attacks may trigger drop in oil price says CGES
By Matthew Jones in London
Published: September 17 2001 14:21 | Last Updated: September 17 2001 
Last week's terrorist attacks on the US are more likely to lead to 
falling oil prices than the escalating prices experienced during the 
Gulf War, according to an analysis by the London-based Centre for 
Global Energy Studies. 

Crude oil prices last week added almost $4 a barrel in the immediate 
aftermath of the bombings to more than $31 before slipping back to 
about $29 on Friday. 

However, the CGES said on Monday the attacks posed a greater risk to 
the demand side of the oil balance than the supply side because of the 
expected adverse effect on the global economy. 

"Economic recovery will almost certainly be delayed and the world is 
likely to slip into a global recession. The implications for oil demand
are dire, even if the economy begins to recover as early as the third 
quarter of 2002," it said. 

The analysis came ahead of the reopening of the New York Stock Exchange
for the first time since two hijacked jets destroyed the World Trade 
Centre last Tuesday. 

Equity markets across Europe continued to slip on Monday morning as 
traders braced for an expected fall of up to 10 per cent in the Dow 
Jones industrial average. 

The CGES said its worst case scenario was that global oil demand would 
weaken by 0.8 per cent year-on-year to 77m b/d in the fourth quarter, 
followed by a 0.3 per cent decline in the first quarter of 2002. 

The market for aviation fuel was expected to be particularly badly hit,
with demand forecast to fall by as much as 400,000 b/d over the winter 
due to a reduction in commercial air travel. This would only be 
partially offset by any increased US and allied military action. 

The Organisation of Petroleum Exporting Countries, the cartel that 
includes many Middle Eastern oil producers, last week said it would 
seek to minimise the impact of any supply interruptions by pumping more
oil into the market. 

The CGES said this could mark a shift by Opec from an implicit policy 
of varying supply to keep prices above $25 a barrel to allowing prices 
to fall within its formal target range of $22-$28 a barrel. 

CGES analysis reflects remarks made by other oil economists last week. 

Traders, however, remained jittery on Monday morning about the prospect
of US military retaliation for the attacks and the impact this could 
have on supply, particularly if Iraq decided to halt exports. 

In morning trading in London, Brent crude prices for November delivery 
rose 37 cents to $29.80 following reports that Pakistan and Afghanistan
were deploying troops along their borders. 
Akio Fujita

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