Thursday, November 17, 2005

New Snags in Oil Talks by Indonesia And Exxon - New York Times

New Snags in Oil Talks by Indonesia And Exxon - New York Times: "Pertamina once controlled Cepu, but concluded that the field was depleted and sold the rights to drill there. That company later sold the rights to explore Cepu to Exxon Mobil, which in 2001 discovered that, far from being depleted, Cepu was one of Indonesia's largest oil resources."

The above paragraph copied from the NY Times article illustrates that investors should trust the forecast of XOM over those of the ranting Peak Oil Cassandra. The chair of XOM estimates that there are upwards of 3.5 Trillion Barrels of oil that have not been discovered. In Indonesia, the state owned oil company, sold a depleted field. XOM explored it and found massive reserves.

US technology can find the oil. Many countries have signed joint ventures with US companies to find oil. Oil is being found. From everywhere from Libya to Zimbawae to South America to Russia to North America.

My forecast a few months back was that oil would drop to around $55 per barrel and then dance around the price for a while before going lower by next fall (after hurricane season). It appears that $57 has become the pivot point. There is pretty strong support in the $57 range but I don't think the price will hold $57 for more than another month or so. When it does break $57, the next dance might be around $50.