?“We find that there is little correlation with the course of global equity markets and the price of oil,” says Adam Sieminski, chief energy economist for Deutsche Bank. “Instead, we expect the oil price will take its lead from the pace of OPEC production cuts.”
View the video of Adam Sieminski's presentation.
Since 1993, OPEC has announced 12 quota reductions to defend oil prices, he says. About 80% of the time, OPEC has succeeded in defending the price of oil.
?“We find that, on average, quota reductions are effective in pushing oil prices higher,” says Sieminski.
These results would tend to imply that the current OPEC quota-reduction cycle will continue until third-quarter 2009, he says. Moreover, oil prices are expected to stabilize about three months after the last reduction in quotas has been announced. If so, this would imply oil prices will not hit rock bottom until the very end of 2009.
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