Interview: Where oil prices are going
>> more on oil. when prices started heading down, boone pickens predict another high. he’s been producing big returns as oil and gas prices increased. brian sullivan sat down with the long-time oil man and asked him for his latest forecast on where prices are going.
>> i had a lot better odds on 30 before 40. i don’t think isle see $35 oil again.
>> ever?
>> no. i think i’ve seen it for the last time.
>> opec is say thage ear doing all they can to increase scombrout put. they always seem to be able to find a few more million barrels every once in a while. we’ve got pretty much full production in the north sea. we’ve got a lot of production, although trouble, in nigeria. demand remains strong. is that really the situation right now?
>> i think you are, but let’s kind of grind it down to light sweet crude. you’re producing 82 million bare rells of crude oil globally daily. we’re seeing 82 million barrels a day. 22% of that is light sweet. that’s what everybody wants, the light sweet that’s what you see on the nymex, west texas intermediate.
>> and cheapest to refine.
>> exactly. and what then happens is there more oil around? yeah, there’s more around. but it’s heavy and it’s sour. half of it is light sweet then they go heavy on their oil. what happens is you look at the discount from light sweet to sour, it’s $16. that tells you how much light sweet is in demand. they’ll get you some sour. you can’t use it. out goes begging now. light sweet will be in demand forever after. you’re producing 82 million barrels a day and demand goes up to 84 million a barrel in 2005 and how do you handle it? / let’s take a look at refining capacity. you’re in balance everywhere. you need 82 million. the refineries are processing 82 million. and then lo and behold you go up to 84 million on demand.
>> unless we see a major drop on demand globally, we should not see a drop in the price of oil over the next foreseeable future?
>> exactly. but you have to give fluctyation, you were down $1. 0 yesterday -- $1.6 0. but those are day-to-day fluctyations. the trend will be upward.
>> a few years ago you had $15 a barrel. should $30 be the historical point for oil? was $15 so outrageous on the down side that we should factor that completely out of our thinking about the price of oil.
>> well, you factor it out because at that time to get to 15, you had an oversupply of oil.if you have an undersupply, you have a panic. you’re never going to have an oversupply, unless you had a worldwide recession and demand did fall.
>> do you see that happen? there’s grumblings of a slowdown, if not a recession. do you think a recession is gomcoming?
>> i don’t know. i’m not an exist. i think i understand the oil game pretty well. and i don’t think you’re going to see oil prices below $35678 i said that, if you wanted to make an even bet with me on $40, i would bet you that it didn’t get to $40.
>> we’ll have part two of brian’s interview a little later. a jury found a company did not lead kelly moore paint abthe risk of an asbestos product. it rejected the demands for damages which the paint company sought in relation to its carbide materials. coca-cola says a criminal probe of the company may end without charges. investigators began look into claims of accounting and marketing fraud made by a fired employee in june 2003. he’s included allegations coke artificially boosted sales. so bottlers could meet earnings goals. they’ve presented evidence to document its revenue.
>> october is known as the month when the market crashes. black tuesday, do you remember that? but it’s also the month when bear markets end. that story up next.
