BP sees low crude prices, reduced demand persisting

Houston Chronicle ^ | March 3, 2009, 10:39PM | KRISTEN HAYS

[thackney]

BP has trimmed its production forecast as well as capital spending on the expectation that low oil prices and reduced demand amid the global recession will last through this year and possibly into 2010.

Chief Executive Tony Hayward said during BP’s annual strategy presentation to analysts in London that in the short term, oil prices will reflect a balance of production cuts by the Organization of the Petroleum Exporting Countries and reduced demand in the recession.

“We therefore do not expect a quick recovery, and it would be wise to prepare for continued volatility,” Hayward said.

OPEC has announced cuts totaling 4.2 million barrels a day since September. While members of the cartel seem to be complying so far, Hayward said, the cuts likely won’t reduce in inventories until the second half of this year.

And he said global oil consumption will likely decline this year as it did in 2008 — probably by more than 1 million barrels a day, the largest drop since 1982.

So BP has trimmed its production forecast through 2012 to 4.1 million barrels of oil equivalent per day from 4.3 million barrels. The company also reduced its 2009 spending plans to $21 billion from $22 billion.

Costs dropping slowly The spending reduction reflects BP’s intention to capture savings on costs. Hayward reiterated a frequent refrain from all the top publicly traded oil majors that while crude prices swiftly fell to 2004 levels late last year, production costs are falling much more slowly, leaving BP and its competitors to push for savings.

“We’re seeing early signs of it happening already,” Hayward said. “The market is beginning to soften and, over the last few months, we have already seen sharp drops in the price of steel and petrochemicals.”

[Obadiah]

Well there’s a brass tacks read on this economy. Nothing good until 2010, and even then who knows.

[concerned about politics]

Because of the new Oboma carbon tax, we can expect gasoline rationing like that of the Carter years. Even worse, there's going to be food rationing. Food producing, shipping, storing, and selling all require energy - every step of the way. Food prices will be too high, and consumers will have to cut back. That will create a food shortage.

Oboma has already taken the "miserable failure" award from Carter, but we haven't seen anything yet.

Taking money and resources away from the producers and throwing it away on the non producers creates nothing but a flushing sound.

[concerned about politics]

PS....We're soon going to be hearing about our Chinese gold being counterfeit.
(That could explain Hillary's trip to China?)
The only people who seem to be discussing it right now are the coin collectors. They only want real gold.