There go the oil sands

Via Naked Capitalism, an interesting outlook for oil demand from Oppenheimer. Most important for Western Canada’s oil sands production is this assessment:

We don’t expect OPEC to aggressively defend oil prices above $60/b, since higher prices slow economic and demand growth, which are not in OPEC’s best interests.

Could oil fall to $60? Well…

Given the bleak global economic outlook, we think world oil demand is likely to be substantially below current forecasts, as we expect steeper declines in developed countries and much smaller growth in developing countries. Despite the pullback from the $148/b record, we believe oil prices are still inflated and not supported by supply and demand, and the longer they remain high the deeper the recession is likely to be and the longer it will take for the global economy to recover. Lower oil prices could help boost consumer confidence and spending and accelerate economic recovery, which is also in the best interests of OPEC longer term.

And a good reminder about why oil price forecasts, and economic outlooks from mortgage-lending banks, deserve a heaping serving of skepticism. Note the ominous/optimistic last sentence:

Outrageous oil price predictions by investment banks have been self-fulfilling prophecies in recent years, since those banks are also among the largest oil traders as brokers and principals, dealers in financial derivatives, clearing houses for other traders and owners of energy assets. Tighter government regulations under a new administration are likely to curb their activities and deflate oil prices.