[Peakoil] Futures price reveals what oil producers expect - higher prices

[Alex P]

Very interesting explanatioin for why the futures oil price does not at
first glance reflect Peak Oil expectation. And how the futures price does
show that producers expect higher prices.

Alex
O4O4873828

ACT Peak Oil
http://act-peakoil.org

_______________________________________
The following is from guest contributor Jeff Vail. Jeff is an intelligence
analyst focusing on energy and infrastructure-related issues. He is a
graduate of the US Air Force Academy and a former USAF Intelligence Officer.
Jeff previously wrote on the The Oil Drum about the increasing violence in
Nigeria.

He discusses an interesting phenomenon with respect to energy futures
prices, that long dated futures are limited in how much they can go up (but
not down) based on arbitrage principles. Because the price of distant oil
futures quickly rise alongside spot market prices when spot markets are
moved by short-term events, we can infer that major producers such as Saudi
Arabia think that the future price of oil will be much higher than the price
at which distant futures are currently trading. This provides further
support to the theory that they don’t believe their own statements on their
future production or on the future price band for crude oil.

http://www.theoildrum.com/node/2412