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Posted on 03/03/2005 11:29:53 AM PST by Jomini
Crude oil prices climbed to near $55 a barrel Thursday as concerns about global demand growth and supply tightness underpinned bullish market psychology, though some traders said they were stunned by how rapidly crude futures have advanced.
Cold weather, the weak dollar and jitters about an upcoming OPEC (search) meeting have contributed to the recent rise in prices. However, many brokers say speculative buying by large institutional investors — as opposed to commercial trading by petroleum producers and refiners — is magnifying the move higher.
(Excerpt) Read more at foxnews.com ...
J
All I know is I am sick of $2/gallon gas. Didn't we go to Iraq to take their oil??? Where is it, then?? Huh, Democrats?? If we did it for the oil then WHY THE HELL AM I PAYING $2 A GALLON FOR GAS!!!
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Get ready to short it for a quick profit, once it hits the headlines.
Keep watching. . .
Halliburton employees drink oil and the blood of working class citizens to stay alive. That's where it's all going.
I hate to sound like a brat (I'm 27), but my father's been independent in the oil business for 20 years, so if prices hit $100 and the world spirals out of control, I may just ask to move back in :) jk
Nobody had any mercy with him when prices were below $10 and he thought he was going to lose EVERYTHING. He's laughing all the way to the bank now. Nobody deserves it more than him. He's the American dream and the reason I'm conservative. He paid his way through college, barely eating a full meal, jerk for a father (my grandfather), etc etc. Never held him back one day.
Hmm, President Bush's energy plan bottled up for 3 years by the democrats, thank your local neighborhood enviro-whacko.
Can we actually get an effective Energy Secretary to put some pressure on OPEC to increase supply instead of this do-nothing putz Spence Abraham? No, I'm not a troll, I'm pro-Bush in the extreme. But I think Spence Abraham has been totally feckless in not doing anything to try to mitigate this roller coast of crude prices.
It will only get slightly uncomfortable for most of us in the U.S. of A., but Germany and France are already in much worse positions and stand to hurt even more - our stubbed toe is their compound fracture. Many folks with lots of money taking advantage of the world situation to artificially bump the prices and make big profits - I expect it to stay relatively high, but to taper off in a month or so and then become more reasonable as the Bush Stratergy keeps doing its stuff.
Like hitting them with anti-cartel laws...remember these countries have large US assets (esp Venenzuela)
The rise in oil prices matches the fall of the dollar. Big surprise. You want $30 oil? You need a stronger dollar to do it.
But the Europeans problem is the exorbitant taxes on gasoline...and everything else.
Khaleej Times - 03/03/2005
DUBAI - OIL prices surged to record levels in 2004 because of strong demand and security concerns but will unlikely maintain that level in 2005, although Opec has enough capacity to meet global demand, according to a senior Opec official.
Dr Adnan Shihab-Eldin, Director of Opec's Research Division and Acting Secretary General, attributed the sharp rise in prices last year to the more than expected demand growth in China, the US and other countries, refinery bottlenecks, and market fears because of regional tensions.
But he noted that soaring crude prices in 2004 were only nominal as they were just only half their level in early 1980s because of inflation and weaker US dollar, the official price of Opec's oil sales.
In an interview with the UAE oil and gas magazine, Pipeline, obtained by Khaleej Times ahead of its publication this week, Dr Shihab-Eldin, expects oil demand to remain strong this year while it is forecast to grow by an annual rate of nearly 1.5 per cent to peak at 111 million barrels per day by 2025.
He also dismissed fears about any supply shortage in the future on the grounds Saudi Arabia and other giant producers are investing heavily to expand their production capacity. He said the Kingdom, the world's oil powerhouse, could lift its capacity to 15 million bpd in a few years.
"Let me reiterate that market volatility and high prices are a major cause of concern for Opec. Before commenting on our price forecast for 2005, we need to explain why nominal prices surged to record levels in 2004, and following moderation in the last two months of 2004, have spiked again since early this yea," he said.
"According to our data, the market has remained well-supplied. But, several other factors put upward pressure on prices, namely, higher-than-expected oil demand growth, especially in China and the US; refining and distribution industry bottlenecks in some major consuming regions, coupled with more stringent product specifications and compounded by a series of hurricanes in the Americas; geopolitical tensions and concerns about adequacy of spare capacity in the event of supply disruptions."
He noted that the tensions have caused considerable speculation in oil futures trading, with the high level of uncertainty instilling what has been referred to as a 'fear factor' into the marketplace, with prices affected by a considerable premium, over and above that which is justified by supply and demand fundamentals.
"Opec responded to the surge in oil demand and rapid price escalation in 2004 by increasing its official production ceiling by a total of 3.5mbd" he said.
"This allowed the basket price to fall by around 25 per cent, to about $36 a barrel by the end of December. In addition, Opec Member Countries stepped up their efforts to expand production capacity. Currently, Opec spare capacity stands at around 2mbd and is expected to reach 3mbd by year-end."
He stressed that despite concerns and prevailing winter market conditions, global oil supply - particularly Opec output - remains strong and more than adequate to meet expected demand.
"On whether high prices have come to stay, 2004 was, as I have already noted, an exceptional year. Though it is unlikely that we will see prices reverting to the very low levels of the nineties, or whether, in fact, they will be more lasting, is unclear at the present time. In light of the current market situation, Opec continues to carefully monitor market developments."
He assured the market that Opec has enough capacity to meet global demand despite expectations growth in consumption this year would also be high.
"We are confident that Opec production in 2005 would be more than sufficient to meet the expected demand and may lead to a further, albeit small, stock-build in the first quarter. Moreover, we foresee continued healthy economic growth in 2005."
"Much of this growth will come from the developing countries, particularly those in Asia, whose economies will also register higher oil demand growth. Similarly, the oil demand increase in 2005 will remain strong, but much less than in 2004. In Opec's reference case scenario of sustained and robust economic growth, medium-to-long-term oil demand is likely to grow at an average annual rate of 1.5 per cent, reaching around 111 mbd by 2025."
He said such an increase would be met through expansion projects being carried out in may producing countries, mainly such giant producers as the UAE, Kuwait and Saudi Arabia.
"Taking into consideration the growing global demand for oil, especially in regions such as Asia, and the well known limited capabilities of most non-Opec producing countries to expand their current production levels, our member countries are heavily investing to expand their current production levels," he said.
"For example, Saudi Arabia is planning to increase capacity up to 12.5mbd in the next few years, and has plans to expand it further to 15mbd should demand warrant it. Kuwait has increased its production capacity to 2.8 mbd and plans further increases in the coming years through a number of production expansion projects such as the Northern fields. Also, Nigeria and the United Arab Emirates plan to increase capacity by 250.000mbd and 100.000mbd respectively. Iran and Libya have also similar plans for expansion.
"Having said that, there should be plenty of oil around for decades to come. The world's oil resource base is not a constraint, with regard to meeting future demand. If we look at cumulative production, as a percentage of the estimated resource base, over the past four decades, we see that this has been relatively stable, and this is likely to remain the case for the foreseeable future."
Asked about the current oil prices, he said the surge last year and this year was only nominal as their real value remained far lower than in 1980.
"It is important to note that the current price level, although high in nominal terms, in real terms it is about 50 per cent below levels reached in the early 1980s- not to mention the reduced purchasing power of oil revenues, as a result of the depreciation in the US dollar."
Thank you. I am IN the oil business. Where was everyone when it was $9!?
Couple of points:
1. Even at $80, oil is cheaper in inflation-adjusted money than 1982.
2. All this is speculation driven up by oil traders in NYC. Little of the money gets to producers. Most is sold at a contract price, which are around $40.
My father is even tempered like myself, but if you mention the words "windfall profit tax" prepare to see the wrath of hell in his normally friendly eyes.
I did note that our markets don't seem to be going nuts over the new prices - more indication that those in the know aren't too concerned about oil going through the roof and staying there.
Well, Jimmah Carter's 90% (yes, 90%!!) tax brackets gave lots of doctors reasons to invest in old oil wells in West Texas --- they could right off so much as WI owners.
Such stupid tax schemes did pay for my house, er field office, in Ruidosso.
Yep, XOM is doing well. Oil is higher than it should be but that's just the way it is. I'm just glad that heating season is soon over. I think I'll stock up on wood this summer.
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