This down-cycle for oil and gas will be “deeper and longer than most expect, with oil consumption falling for 3 years—the longest period since the early 1980s,” warned analysts at Friedman, Billings, Ramsey & Co. Inc. (FBR) in Arlington, Va.
A Rice University think-tank said the US government should require the oil industry to maintain “average minimum gasoline inventories” to prevent emergency supply shortages and price spikes that occurred after hurricanes hit the Gulf Coast in 2005 and 2008.
In its latest Short-Term Energy Outlook (STEO), the US Energy Information Administration has lowered its projections for oil and natural gas demand in 2009-10 as the global economic contraction continues to depress energy demand.
A recent Deutsche Bank analysis finds that in the short term, oil prices likely would have to fall to $20/bbl and below for nonmembers of the Organization of Petroleum Exporting Countries to shut in a large amount of production.
Falling crude prices could upset the symmetry between duties on crude and products in Russia, potentially changing the incentives and actions of refiners there, according to a recent Refinery Evaluation Model Insight from Wood Mackenzie.