Posted on 05/02/2005 3:18:09 AM PDT by RWR8189
SINGAPORE (Reuters) - Oil prices fell more than 1 percent on Monday, hovering at a 10-week low just above the $49 mark as higher OPEC supply and swelling crude stocks in the United States weighed on the market.
U.S. light crude dropped to an intraday low of $49.05 a barrel, the lowest since Feb. 22 and almost 16 percent below the record $58.28 struck on April 4.
At 0810 GMT, U.S. crude was 52 cents down at $49.20. Markets in Singapore and London were closed for a public holiday.
"It's a split market for the time being. Short term it's definitely weak if you look at stocks and OPEC production," said Tony Nunan at Mitsubishi Corp. in Tokyo.
"But medium term, three to six months out, it looks like supply could be really tight."
Prices came under selling pressure last week as U.S. crude stocks jumped by a surprising 5.5 million barrels as imports into the world's biggest comsumer surged to almost 10.9 million barrels per day (bpd), the third-highest weekly volume on record.
The Organization of the Petroleum Exporting Countries has pledged to increase supplies to cool prices down to below $50 a barrel, which has helped to build U.S. crude stockpiles to the highest level since mid-2002.
The cartel has an official production ceiling of 27.5 million barrels per day (bpd), excluding Iraq.
"Since our last meeting in Isfahan (in mid-March) until now, there is 2 million that has been added to the market," OPEC President Sheikh Ahmad al-Fahd al-Sabah said on Monday.
"When we were in Isfahan ... the (OPEC 10) production was 27.7 million and now our real production is 29.7 million."
Including Iraqi production, OPEC's current output would beat levels of over 30 million bpd pumped late last year that took OPEC supply to 25-year highs.
Sheikh Ahmad had said the cartel would add 500,000 bpd of fresh supplies to world oil markets starting from May. But he said "by numbers, we already have more than 500,000 of real production in the market."
OPEC, which controls half the world's crude exports, meets again on June 15 in Vienna to chart production strategy for the second half of the year.
Most of the 10 OPEC members with quotas -- Iraq is excluded -- are now producing at full tilt as the exporter group seeks to encourage stockbuilding in the coming months to create a buffer for strong demand later this year.
But dealers remain concerned over a potential gasoline supply crunch in the peak-demand summer months or a shortage of heating fuel toward the end of the year as the northern hemisphere heads into winter.
Some analysts worry that high commodity prices are starting to dent world economic growth by fueling inflation and prompting a rising trend in global interest rates.
The U.S. economy grew at its slowest pace in two years during the first quarter -- an annual rate of 3.1 percent -- fanning concerns of a possible slowdown in oil demand growth.
Even if you managed to "prove" they want more by finding some quote printed somewhere I would still know it not to be true. It is the same as confined electricity producers. They hate peaks becasue they have to build to supply peak power. Doing that kills profits and it would be much better for them to simply throttle usage via price, as you see done with gas prices.
I don't think you've studied enough economics to understand the explanation, but thanks for trying.
I don't think you realize how much it hurts profits to build a big refinery or a new power plant to satisfy peaks.
If it was an anti-Catholic refinery ringed with windmills, you'd be all for it.
Not to change the subject or anything.
Thank you for your reply. I did not suggest we were near gas rationing, but rather, I was trying to point out that a major crisis situation, like gas rationing, would be required to overcome the combined resistance fromNIMBY types and the environmentalists so new refinery capacity and nuclear power generators could be built. The desire for more energy production has yet to become strong enough to overcome resistance by its opposition. Even the Dems are beginning to grumble objections to Bush's plans for using closed military bases without even looking at any specific plans.
I'm not changing the subject. I've already told you, I'm not going to provide you the education you'd need to understand why you're wrong. Not for free anyway.
You are nice and arrogant, just like a good freeper should be.
I am a realist.
FYI; About four hours in a modern refinery.
Alright maybe i got alittle carried away with "gimme" but i would sure like to see some new technologies enter into the market that would either reduce or eliminate the need for oil. I suppose though i'm just a dreamer.
Prices at the pump always seem to go up faster than they come down. In other words, a $5 upward spike in crude prices will be reflected within days as a similar spike at the pump. A $5 downward spike in crude will result in a gradual drift downward over a period of weeks.
It may be true but something needs to be done about it. I honestly doubt that in the 100+ years of using oil as a primary fuel source that someone out there hasnt developed more energy efficient technologies that would greatly improve not only the environment but be fairly priced. I suppose a declining dollar does play a role in this situation but my ultimate utopian dream would to live in an america that was loosed from its dependence on foreign oil (i imagine everyone else would like the same too).
I agree with you on that. The thing we have to remember is that those "new technologies" will only come about in market-driven, capitalistic systems. I just hope the US will continue to be one of those countries.
Most certainly. My only concern is (consider it a conspiracy theory if you will) that there are certain forces in play out there that would not like to have oil disappear. I've done alot of reading in different scientific magazines on this topic. Why, Nikola Tesla, the man who really invented the light bulb (not edison), the radio (not marconi), the transformer (making Westing house an Energy Giant), and other things, devised a way to transmit power through the air by supercharging the upper atmosphere with a Tesla Coil, causing the earth to act like a capacitor. With this stored energy, all he did was stick some sort of conductive rod into a car he had built during the early 1900's and was able to drive around at speeds up to 90 mph with no onboard fuel supply! Its a shame though after his death all of his records and inventions were confiscated by the government. We should scientifically be atleast 50 or more years ahead of where we are now in terms of the energy issues we face.
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