Wednesday, April 20, 2005

EIA remain bullish on Oil

Excerpt from This Week In Petroleum:
Until demand growth slows dramatically or supply capacity grows significantly more than seen in recent years, it is unlikely that WTI will fall substantially below $50 per barrel for any significant period of time. While at least one prominent oil market analyst does expect a surge in non-OPEC production later this year, EIA does not share that view. While high oil prices should eventually lead to lower demand and more supply capacity, EIA does not envision this occurring in the immediate future. Thus, while some oil market analysts are calling for a sharp drop in oil and gasoline prices this summer, EIA is not expecting WTI to fall below $50 per barrel or the U.S. average retail price of regular gasoline to drop below $2 per gallon for a sustained period anytime soon.
I am yet to see a good argument as to why I should not believe this.


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