Oil to settle below Budget price
PORT SPAIN
Trinidad & Tobago Express
Petroleumworldtt.com
17 10 08
Enill blames decreased demand, OPEC cut in production:
THE current fluctuating cost of crude oil is expected to stabilise by next year, but at a price lower than anticipated, Energy Minister Conrad Enill admitted on Friday night.
"It is expected that future oil prices would remain relatively stable, averaging US$60 to US$65 per barrel throughout 2009," Enill said, while addressing the Annual Christmas Dinner and Award Ceremony of the Quarry Association of Trinidad and Tobago, at the Centre of Excellence, Macoya.
The National Budget is pegged to an oil price of US$70 a barrel.
Earlier on Friday, while in the House of Representatives, Prime Minister Patrick Manning said he will say next week how Government intended to revise the Budget, in light of the falling oil price.
On Friday night, Enill referred to a Wednesday release from the "Energy Information Administration's short-term energy outlook", saying:
"You must be aware that we are experiencing a worldwide decrease in energy demand, together with a substantial reduction in crude oil and other energy prices, all resulting from a decline in global finances.
"With this in mind, the impact of such an economic downturn would have an immediate effect on demand, which would result in the lowering of current and expected natural gas prices, as shown today."
Enill also told guests at the function that OPEC proposed to lower its production target by 1.5 million barrels a day, to offset the current decline in demand for oil.
He said this approach of decreasing oil production was expected to have the effect of stabilising the oil price.
On Budget Day, September 22, the oil price was US$130 per barrel.
Oil prices have been on a steady decline since they reached a record average of US$147.27 per barrel in July. Friday's oil price settled at US$57.04
In a telephone interview yesterday, energy economist Gregory McGuire maintained his initial stand on the matter since the Budget presentation, that the oil price used to calculate this year's budget revenue was "too high".
"Nobody knows what the price will settle at, what we do know is that the market will take time to settle down, the initial price was too optimistic a view, we have to be careful because we are in a period of adjustment," McGuire said.
When asked what he would like Manning to say next week about the amended budget, McGuire said he just wanted "honesty".
"Be open, tell us things have changed, say that we don't know where the price will settle but that we will try to bring the economy down for a soft landing," McGuire said.
By
Joel Julien
from Trinidad
Express
- jjulien@trinidadexpress.com
Trinidad
Express
Sunday, November 16th 2008
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