By the OGJ Online Staff
HOUSTON, Sept. 13 -- Larry Goldstein, president of the Petroleum Industry Research Foundation Inc., New York, said Thursday he expects the Organization of Petroleum Exporting Countries to supply additional crude to the world market immediately.
"OPEC will not wait. It will put oil out in advance of the needs," he said in an interview.
He said the crude oil markets have remained calm despite terrorist attacks that disrupted US financial markets in New York and damaged the Pentagon.
When the US responds to the attacks, Goldstein predicted it would be "massive." To avoid a shock to the oil markets, Goldstein said OPEC would act soon to provide a cushion of crude. The cartel has a regular meeting scheduled Sept. 26 in Vienna.
Saudi Arabia and Venezuela pledged Wednesday to do whatever is needed to keep world oil markets stable.
Inventories are low but sufficient, Goldstein said. If consumers remain calm, there should be no problems in gasoline and heating oil markets. "The calm has to permeate down to the distribution markets and to end use consumers," he said. "There is little cushion for a sudden run on stocks. Consumers could create the problem."
Meanwhile, physical deliveries and transactions involving crude oil are functioning smoothly but at a reduced volume. Global markets such as the International Petroleum Exchange of London are providing the physical markets some price transparency.
Because the New York Mercantile Exchange remains closed, physical trades of crude are taking place by fax, e-mail, and telephone, he said. The financial markets are unable to clear transactions, and there is little hedging or any other financial type transactions taking place, Goldstein said.
Meanwhile, Olivier Appert, director of the long-term cooperation and policy analysis office at the International Energy Agency, said the possibility of a US retaliatory strike in the Middle East "can create both instability and insecurity and constitutes a risk premium for oil."
Appert said, "The trouble with oil prices is that they have no point of equilibrium and can shift from $10/bbl to $50/bbl in no time. At the IEA, the opinion is that, right now, the terrorist attack and its aftermath does not change the physical flow of oil, but only the paper side."
He said some bearish factors could bring down oil prices. The IEA had estimated that world oil demand would only increase 500,000 b/d this year. And he said the terrorist attacks in the US "will also bring down consumption as the economy slows, as traveling by aircraft becomes risky, and as people tend to save instead of spend."
