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Citing Canada as the only non-OPEC country whose oil production is increasing, veteran oil observer Henry Groppe of Houston joins a growing throng predicting oil will average at least $75 US a barrel in the near future.
As he has almost since starting the oil consulting firm Groppe, Long & Litell in 1955, he ignores weekly inventory numbers and uses the fundamentals of production and consumption to predict trends.
Speaking to Richardson Partners FinancialinEdmonton, Groppe, 83,says reduced world production will cause oil prices to continue climbing.
Inthefall of2006,theInternational Energy Agency forecast there would be an increase in non-OPEC oil production during recovery from hurricane Katrina, so OPEC countries reduced their output. But in 2007 there was no increase in non-OPEC production, and oil rose from$34 to $147.50 US a barrel.
"Now the Saudis are repeating the same mistake for a different reason," saidGroppe. "Inthemiddleof`08,everybodysaidthefinancialcrisiswould cause a collapse in oil consumption, andtheSaudisagainbeganreducing production."
As oil climbed from$34.50 a barrel inDecembertothe$62range, Groppe combinedwiththeMiddlefieldGroup to start the Groppe-Middlefield Energy Fund in May.
"This time it`s an extraordinary set of circumstances, and it`s the most profoundinvestmentopportunityI`ve seen in my entire career."
He notes that some seven billion people in the world use oil products daily, ranging from plastic baby bottlestojetfuel, andthere`s"continually declining capacity."
Whileoptimisticobserverspredicta recoveryfromrecessionintheUnited States will start as soon as this August, Groppe says it would take the Saudis eight more weeks to ramp up production, taking us at least until October.
Read the full article here.
As he has almost since starting the oil consulting firm Groppe, Long & Litell in 1955, he ignores weekly inventory numbers and uses the fundamentals of production and consumption to predict trends.
Speaking to Richardson Partners FinancialinEdmonton, Groppe, 83,says reduced world production will cause oil prices to continue climbing.
Inthefall of2006,theInternational Energy Agency forecast there would be an increase in non-OPEC oil production during recovery from hurricane Katrina, so OPEC countries reduced their output. But in 2007 there was no increase in non-OPEC production, and oil rose from$34 to $147.50 US a barrel.
"Now the Saudis are repeating the same mistake for a different reason," saidGroppe. "Inthemiddleof`08,everybodysaidthefinancialcrisiswould cause a collapse in oil consumption, andtheSaudisagainbeganreducing production."
As oil climbed from$34.50 a barrel inDecembertothe$62range, Groppe combinedwiththeMiddlefieldGroup to start the Groppe-Middlefield Energy Fund in May.
"This time it`s an extraordinary set of circumstances, and it`s the most profoundinvestmentopportunityI`ve seen in my entire career."
He notes that some seven billion people in the world use oil products daily, ranging from plastic baby bottlestojetfuel, andthere`s"continually declining capacity."
Whileoptimisticobserverspredicta recoveryfromrecessionintheUnited States will start as soon as this August, Groppe says it would take the Saudis eight more weeks to ramp up production, taking us at least until October.
Read the full article here.