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EPE next week could have some results coming, check out the recent announcments...


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Analyst Wrap



Brendan Egan, Steve Rotherham


THE yin and yang of the New Year was no more evident than with this week's scope of news - BHP turned on the taps of its Angostura oilfield in the Caribbean and Woodside choked back the Sunrise project - the seond time in two years.


BHP has announced the first production from its Angostura oil and gas field in Trinidad and Tobago. Initial oil production is expected to be around 60,000 barrels of oil per day (gross). The bulk of produced gas is being re-injected to support oil production while some is being used to fuel operations on the processing platform. In the second phase of the project, Angostura's significant gas resources will be commercialised


But it wasn't all good news for BHP with the US Coast Guard invoking its right to 'stop the clock' on BHP's plans to develop the floating Cabrillo Port LNG receival facility offshore California. Meanwhile Mexican authorities have approved a floating receival terminal for LNG from the Gorgon project offshore Western Australia. This is will be the second Mexican Pacific coast LNG terminal and it it uncertain whether the North American market requires more than two west coast LNG facilities.


Back in Australia, BHP seems set to sell its stake in the Laminaria and Corallina oil fields in the Timor Sea to UK-based Paladin Resources following Woodside's announcement that it would not exercise its pre-emptive right to acquire this interest.


Instead Woodside has has signalled its determination to boost its competitive positioning in the Gulf of Mexico, forming an alliance with Explore Enterprises of Louisiana to explore, buy and develop wells in the region. Explore is intended to supply much-needed local knowledge and management expertise to Woodside's GoM operations.


The Woodside-operated well Tiof-6, off the coast of Mauritanina, West Africa, also made news this week. Logs show the well intersected oil over a gross interval of at least 123 metres and it is interpreted that no gas or water leg was intersected by the well.


On the other coast of Africa, Woodside and its partners, ASX-listed Global Petroleum and UK-based Dana Petroleum, have completed a 2D seismic survey of offshore Kenya Blocks L-5 and L-7. Meanwhile, rumours out of Kenya are saying that Woodside has also completed a a two-and-half year seismic survey over other large areas of offshore Kenya and is optimistic that big reserves are there for the finding.


However Woodside saved its biggest news until this morning when it made good on its promise to cancel the Sunrise LNG project in the Timor Sea, repeating its actions from October 2002. Timor Leste's dithering over fical and legal details means it will be many more years until the fledgling country sees any gas revenues.


The smaller players have also been making news.


Aussie explorer Amadeus Energy has justified its recent rise up to 73c this week from 61c last month after releasing encouraging news from several current Texan drilling operations.


Back in Australia, Tap Oil has taken a punt in a new offshore Carnarvon Basin exploration permit that it describes as "very prospective". This block ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“ W04-13 ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“ is located next to the producing Woollybutt oil field permits where Tap has a 15% interest.


Tests at Woollybutt-4 confirm a six-metre net oil column with a good reservoir quality and an oil-water contact at the same level as seen in Woollybutt-3, according to Tap.


On the other sound of the country, partners Nexus and Apache have found two hydrocarbon-bearing zones at the Grayling-1A well in offshore Gippsland.


Drilling for a different commodity ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“ hot, dry rocks ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“ Geodynamics and Petratherm kept themselves visible with their South Australian operations. Geodynamics is preparing to begin a geothermal reservoir testing program at its Habanero-2 well while Petratherm has just spudded its maiden geothermal well, Paralana-1.


Hopefullly they will have better luck than Mosaic whose shares took a knock after the company warned the failure of its Whinstanes-1 gas well in southeast Queensland meant it could not fulfill a gas contract with CS Energy and would fall short of revenue forecasts.


Rookwood partners Oilex and Victoria Petroleum also had to face some disappointment when the first drill stem test from Rookwood Central-1 found large quantities of water, indicating that the field's recoverable reserves are likely to be smaller than first thought.


Stuart Petroleum and Arc Energy have had no such problems.


Stuart achieved record oil production from the South Australian portion of the Cooper Basin last month ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“ the third month running that it has achieved this result. Stuart's share of Cooper oil production in December was 82,000 barrels, a 34% increase on November's record performance, the company said.


Arc is continuing to enjoy success at its Dongara gas where Dongara-32 has been flowing gas at estimated rates of more than 6 million cubic feet per day.


Arc has also resumed its Denison seismic survey in the Perth Basin.The company says this is the largest seismic undertaken in onshore WA. It is expected to lead to drilling in early 2005 and it has the potential to lead to developments that could double or treble the size of the company, according to Arc.


Coal-bed methane has come of age in Queensland.


In the south-west of the state, the Queensland Gas Company reports that increased flows at its Argyle East coal-bed methane pilot operation will accelerate certification of gas reserves required under a 10-year supply agreement with fertiliser manufacturer Incitec Pivot. QGC also reports its Berwyndale South-9 well is flowing gas at a weekly average of 517 thousand cubic feet of gas per day ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“ a record for CBM gas from a single Surat Basin well.


In south-east Queensland, Arrow Energy has entered into an agreement to supply CBM and electricity to a global gelatin manufacturer, Gelita Australia Pty Ltd, for five years starting from mid-2006.


In north Queensland, CH4 Gas Ltd says its contracted CBM gas sales for 2006 have risen by 23%.


CBM is also attracting intere st across the Tasman, where government-owned coal producer Solid Energy has formed a joint venture with US independent oil and gas company Resource Development Technology to investigate and develop coal bed methane gas in Waikato coal seams.


In other NZ news, the government has offered free seismic to explorers in new exploration blocks off the east coast of the North Island's as part of a scheduled tender round of petroleum basins later this year.


Meanwhile, a major seismic program is already underway off the west coast of the North Island. The Veritas Viking II vessel has started NZ's largest-ever, most sophisticated 3D offshore seismic survey program has started, conducting a 1760 square kilometre shoot in Taranaki waters for US independent Pogo Producing Company, a newcomer to New Zealand.


Other companies likely to use the vessel for their own seismic while it is in the country include Discovery Geo, the "West Maui" PEP 38460 partners, headed by operator New Zealand Overseas Petroleum, and Austral Pacific Energy.


Austral Pacific will be hoping that its planned seismic goes more smoothly than the onshore Taranaki Cardiff-2 well where failure to extract some stuck downhole equipment has forced a sidetrack operation. The Cardiff-2A operation is scheduled to take about six weeks from present in order to case off the Kapuni Formation in preparation for production testing.




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Monday January 24, 07:12 AM London Time

Big Freeze Sends Oil Prices Up Again


Oil prices have climbed to within a dollar of $50 a barrel after the blizzards enveloping the US northeast boosted demand for heating oil. Uncertainty ahead of Sunday's Iraqi elections and OPEC meeting also kept prices near an eight-week high.


US light crude rose 59 cents to $49.12 a barrel, building on Friday's $1.22 hike and pushing the market toward the $50 mark last touched on November. 30.


The snowstorms blanketing large parts of the northeast, the biggest regional heating oil market in the world, has kept temperatures well below the seasonal average, driving homeowners to fire up their furnaces.


Traders are worried that the current freeze may drain stockpiles that remain below year-ago levels, despite an unusually warm first half of the northern hemisphere winter.


Oil dealers also fear that sabotage on Iraq's oil infrastructure may escalate in the days leading up to or following the election next Sunday.


This is the same day that OPEC officials will meet to discuss output policy.


Any additional disruption to Iraqi exports would add to pressure on the global supply chain.


Suppliers are still grappling with outages of nearly 500,000 barrels per day from Nigeria, the North Sea, the Gulf of Mexico and Canada.


OPEC said on Friday that world stocks have been rising this winter, typically a period when inventories decline, but the build was limited by stronger-than-expected demand growth.

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03/09/05 11:46:27

Your Free Daily American Capitalist

Baltimore, MD


China Thirsty For Oil


Mount St. Helens flipped its lid, shooting volcanic ash 36,000 feet above sea level, as did many of the bulls on Wall Street who watched this morning's pre-market futures tumble.




Think US$2 is expensive at the pump? Just wait. It's likely to move higher after crude made a pass at US$55 on news that Chinese oil demand will rise about 33% more than forecast this year. According to reports, ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“the expected drop for fuel to run power generators hasn't materialized.ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ That demand, coupled with a depressing oil growth outlook, will keep the oil markets tight and oil prices high at least through 2006.




Dow 11,000 on rising oil demand and tight supply? Don't hold your breath. So much for the good intentions of our bullish predictions earlier this week. But please let us reiterateÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂwe are long-term global bulls. Of course, there are bound to be some bumps (or oil slicks) along the way.



Oil, Oil, OilÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¬ÃƒÆ’Æâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¦ and More Oil




Even if we do break above 11,000 this month, we don't expect it to last as long as oil remains pricey per barrel and at the pump. Obviously, consumers aren't going to spend as much if most of their funds are going to fuel their tanks.




It doesn't help that China could consume up to 7.4 million barrels a day in Q3 and 7.6 million in Q4, according to the EIA, which also upped its Q1 and Q2 forecasts by 100,000 barrels per day and raised its 2005 world oil demand forecasts by 200,000 barrels per day to 84.7 million. U.S. forecasts are likely to average 20.8 million barrels per day. That's up by 10,000 from previous forecasts.




What would help are some reassurances from the Bush Administration. Right now, we're at the mercy of what OPEC members have been spouting off.

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In reply to: Brantley on Thursday 10/03/05 08:30am

This market is hard to read Brantley. On one hand we have Chinese demand, but that is still less than 10% of the world total and a third of the US. Chinese demand could be ameliorated if they got their coal industry together. That's past breaking point - the harder they dig, the more miners they lose - and they are just the reported ones. So they buy oil for energy.


Then we have repeated instability in the ME - GWB rattling the sabre at Iran and the same time telling us the ME is at a watershed and on the improve. Yeah, right.


The northern hemisphere cold season should soon pass and take the pressure off. My 4 weeks up there this year validated the cold!!


Where are the hedge funds in all of this? Somewhere that's for sure, and I bet it on the long side for the time being.





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In reply to: Krumbs on Thursday 10/03/05 08:44am

Hi K....


I agree. What I loved about that article was...



What would help are some reassurances from the Bush Administration. Right now, we're at the mercy of what OPEC members have been spouting off.


If I had my guess the hedge funds and GB paid for this article. LOL.


Cya K....

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not sure if this is the right place to post it but i came across a really useful excel table listing api gravities and sulfur contents for all the different types of hydrocarbons produced across the planet. it also graphs these into what is sweet, intermediate or sour, and what is heavy or light.




the table relates to a regulation governing the carriage of heavy crude oil.

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If your interested in oil and gas read CNN this morning. Merrill Lynch ups long term price of oil by 40% to $42.00. Forcast for 2005 $56. The real interesting article concerns the natural gas price "hot prices seen for chilly winter" PSA,FAR,AZZect
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In reply to: albion on Saturday 20/08/05 07:05am

albion ..

I'll just post it, just in case some could have trouble finding it..




Merrill ups long-term oil price view

Forecast for '05 now at $56 a barrel; long-term price forecast up 40% to $42 a barrel.

August 19, 2005: 6:16 AM EDT



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Play video





SINGAPORE (Reuters) - Merrill Lynch raised its forecasts Friday for long-term U.S. light crude prices by 40 percent to $42 a barrel, a day after bigger rival Goldman Sachs said it expected oil to be around $60 at the end of the decade.


Oil prices have averaged $53.71 a barrel so far this year.


Merrill Lynch's Global Energy Team also increased its price forecasts for U.S. light sweet crude to $56 a barrel this year, up $6 from its previous forecast, and $52 in 2006, up $10.


"We reinforce our long-held theme of capacity tightness across the macro complex," it said.


"We continue to see a well-supported fundamental backdrop for crude pricing over the next two to three years," it said, citing limited refining capacity, resilient demand for light products in OECD countries and disappointing production capacity growth worldwide.


However, Merrill expects oil prices to trend lower in the longer term.


"In our view recent strength has been driven by short-term supply disruptions and renewed geopolitical tensions. Longer-term, we believe $60 a barrel oil is unsustainable and expect prices to retrace," it said.


Goldman, the world's top financial energy trader, is much more bullish, saying that a lack of investment in exploration and production would keep long-term oil prices around $60.


Even with prices near record levels, Goldman said oil companies were sitting on huge cash piles of nearly $500 billion rather than pouring money into new projects because of uncertainty over their profitability.


The two reports highlight analysts' starkly divided opinions on how the industry will respond to the more-than-two-year rally in oil prices, which topped $67 a barrel last week. U.S. crude traded at $64.35 on Friday, up 48 percent since January.


Analysts and some governments have called on oil companies to invest more of their windfall profits in production and refining assets to help ease a global capacity squeeze, but many firms remain wary of triggering another bust cycle like the late 1990s.


Goldman also raised its average U.S. oil price forecasts for the rest of this year and for 2006 by $13.50 and $13.00 to $67 and $68 a barrel respectively.


Merrill Lynch said U.S. light crude prices would likely stay around $42 from 2009 as it believes new production capacity should emerge from 2007 and additional refining capacity would surface later.


The recent strong rally in oil prices has been largely driven by news of near-term supply disruptions to both upstream production and in refining, and renewed geopolitical tensions in the Middle East, Merrill said.





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