TORONTO, March 6 /PRNewswire-FirstCall/ -- The resumption of the hurricane season in the Gulf of Mexico will see oil prices rise sharply in the second half of the year, predicts a CIBC World Markets report released today. The report also finds the advent of increasingly destructive cyclonic activity in the Gulf, as predicted by many climatologists, will likely spell declines in Gulf production over the balance of the decade and increase U.S. reliance on foreign supplies. "This drop will result in a big jump in U.S. oil dependency from a current level of 65 per cent to an estimated 72 per cent by 2010," says CIBC World Markets Chief Economist Jeff Rubin. "In the short-run, production disruptions will likely see West Texas Intermediate establish a new record high crude price over this year's storm season and average US$78/bbl in the fourth quarter." The CIBC World Markets report examined the impact on production rates and planned capacity expansions over the balance of the decade in the Gulf of Mexico if climatologists predictions of increased cyclonic activity in the Gulf pan out. The report found the vulnerability of production in the region has not changed from last season and is not likely to improve over the next several years. "In the longer term, hurricane disruptions will deal a lethal blow to America's quest for greater energy self-sufficiency," notes Rubin. "We predict Gulf production will average about 20 per cent below the 2003 production peak over the rest of the decade." The CIBC World Markets estimate of 1.2 million barrels per day of production in 2010 is a million barrels per day lower than the most recent U.S. Department of Interior estimate. Together with continued depletion from on-land fields, total U.S. crude production will likely decline from 7.3 million barrels per day in 2005 to 6 million barrels per day by the end of the decade. As a result, import dependency will rise from 65 per cent to 72 per cent over the period. Mr. Rubin noted that the study's findings suggest that the route to greater American energy self-sufficiency, at least insofar as oil is concerned, lies with reducing demand rather than increasing domestic supply. The CIBC World Markets' Monthly Indicator Report is available at http://research.cibcwm.com/economic_public/download/mimar06.pdf CIBC World Markets is the wholesale banking arm of CIBC, providing a range of integrated credit and capital markets products, investment banking, and merchant banking to clients in key financial markets in North America and around the world. We deliver innovative full capital solutions to growth- oriented companies and are active in all capital markets. We offer advisory expertise across a wide range of industries and provide top-ranked research for our corporate, government and institutional investor clients. DATASOURCE: CIBC CONTACT: Jeff Rubin, CIBC World Markets Chief Economist, (416) 594-7357, ; or Susan McDougall, Communications and Public Affairs, (416) 980-4047, ; Archived images on this organization are searchable through CNW Photo Archive website at http://photos.newswire.ca/. Images are free to accredited members of the media.

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