"History is a wonderful thing, if only it was true"
-Tolstoy

Monday, August 07, 2006

Alaskan Oil

News over the weekend that BP will have to shut down Prudhoe Bay for repairs.
AP:
"BP said oil production would be reduced by 400,000 barrels a day, close to 8 percent of U.S. oil production."

If oil doesn't gain at least $5 on this news, my guesss is that it will drop $5-10.
Why?

News of major cut in production should be positive for prices.
If not, this will be evidence that there is plenty of oil either in the market or ready for the market.
This would drive down prices.

Unwinding of speculative positions will further pressure prices.

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