Oil prices rose by more than $2 a barrel on Friday in a shortened trading session ahead of the three-day holiday weekend in the United States. Posted on 07/01/2005 3:09:28 PM PDT by M. Espinola
Oil prices rose by more than $2 a barrel on Friday in a shortened trading session ahead of the three-day holiday weekend in the United States.
Traders shrugged off a rise in OPEC's official production ceiling - a move they called symbolic - and they played down the significance of a decision Thursday by the oil cartel to suspend talks on an additional ceiling hike. The president of the Organization of Petroleum Exporting Countries said Thursday the group would raise its output target if prices rose to $60 a barrel.
After Friday's rally, that level is not too far away.
August futures contracts for light sweet crude on the New York Mercantile Exchange surged $2.25 to settle at $58.75 a barrel.
Analysts said prices moved up as traders took long positions - buying oil ahead of the July 4th holiday Monday. That was considered a normal development given the recent volatility in the market.
August gasoline futures soared 8.27 cents to $1.6485 a gallon, while heating oil futures climbed 7.5 cents to $1.7111 a gallon.
August Brent crude futures rose $2.04 to $57.62 a barrel on London's International Petroleum Exchange.
The June 15th OPEC decision to raise its official production quota by 500,000 barrels to 28 million barrels came into effect on Friday. But the group, including Iraq, which is not bound by the quota system, already is pumping close to 30 million barrels a day - or about 35 per cent of global demand.
OPEC on Thursday decided to suspend talks on another hike following the recent tumble in prices, but analysts said that development had little impact on the market.
"The market was fairly cynical about that proposal," said Deborah White of SG Securities in Paris. She said with overproduction a fact, "most of the market participants didn't think it would translate into a production increase."
While oil prices closed above $60 a barrel on Monday, they fell for three straight days and ended Thursday below $57 a barrel.
Analysts attributed the cooling down of oil prices to profit-taking by hedge funds and a dampening of last week's bullish market sentiment by U.S. government data showing increased supplies of crude and other fuels.
Prices are expected to continue falling at least in the short term, analysts said.
"The inventory data from the United States dampened what was a fairly bullish market last week, and we haven't seen the last of this," said ANZ Bank energy analyst Daniel Hynes in Melbourne, Australia.
The U.S. Energy Department's statistical arm said Wednesday inventories of crude oil increased by 1.1 million barrels to 328.5 million barrels, 8 per cent above year-ago levels.
Refinery utilization also increased to 96.3 per cent of capacity, up from 94.8 per cent the week before, and that appeared to give a lift to the fuel supply. Gasoline inventories grew by 300,000 barrels to 216.2 million barrels, or 4 per cent above year-ago levels, the government said.
"The report that U.S. refiners had increased utilization and output at a time when demand is strongest took people by surprise," Hynes said. "It hasn't changed people's minds that refinery capacity is tight, but it has dampened sentiment."
Crude oil futures are more than 51 per cent above year-ago levels, but would still have to top $90 a barrel to reach the inflation-adjusted high set in 1980.
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Associated Press Writer Gillian Wong contributed to this report from Singapore.
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Well, guess the liberals are going to have to sell their SUV's and Hummers and private planes.Let's see how long they scream about the Ardvarks in Anwar when the price of gas for the moms in Suburbia goes to $5 a gal.
As Chieftain said so politically astute , " We had a good ride for quite awhile. Now we're going to have to suck it up."
Getting jumpy. This could be a sign of an impending crash. Don't know what they would consider a crash to be, maybe $50. OTOH, it might not be a sign of an impending crash but a skyrocket to $70. Or it might stay around $60. Does that pretty well cover the possibilities?
"Getting jumpy. This could be a sign of an impending crash."
Don't know. I think the hedge money is relatively new, and they might stick with oil, dumping dollars there. The addition of hedge money into the oil market might be a permanent feature. As noted in the article, the usual forces pushing up and down the price almost seem irrelevant.
There is reconstruction of the economy of the country and globally, if there is such a thing as a global economy at all. This is nothing new, of course, there is always restructuring of the economy these days. Africa sure is getting a lot of attention. Are we going to do some kind of urban renewal project over the entire continent? It might be necessary in order to secure those oil resources that are in Africa.
I am losing all patience with this administration's indifference toward rising oil prices. Virtually every player in the economy is being squeezed and I see a major recession hitting the U.S. by autumn with the way things are going. Someone tell me I'm overeating and why. PLEASE give me some reason for optimism.
Bonds got hammered today. 10year yields from 3.93 to 4.05%
Sorry...overreacting.
"Are we going to do some kind of urban renewal project over the entire continent?"
Not really. Some cosmetic stuff, but mostly the old "debt relief" - American taxpayers subsidizing European banks for bad loans to Africa they don't want to renegotiate. The banks hire expensive spokesmen like Bono. The new twist in the game is American, boondoggle for American drug companies. This is seen in Bush's Aids drugs program, now the unspecified malaria program.
"I am losing all patience with this administration's indifference toward rising oil prices."
Texas oil men doing mighty right by it. Democratic elites which could raise a stink are wholly alienated from the people and obsessed with what Karl Rove might say about them.
This was the talk of the NYMEX floor today; these folks always go crazy with even a potential hurricane. Also, there were some figs out speculating about crude/product demand growth in China. Seems like we get a fresh set of these every week...and they haven't been right, except in broad directional terms, for a couple of quarters at least.
But, as they say, ''any excuse to buy'' -- when mkt sentiment is bullish, whether rightly or wrongly, ''bullish'' sounding news will have a disproportionate effect and ''bearish'' news will be largely ignored.
"Texas oil men"
Wasn't there a saying popular before the Great Depression "what's good for Ford is good for America?"
It's okay to strike deals with corrupt regimes, to be cold about it, but only if the regimes are stable. If this Africa aid is to encourage stability it makes sense. Converting regimes to something resembling ethical is probably beyond the possible in the short term. Anything beyond ten years planning in the oil resource category seems too far out to be practical.
Gas users arent driving prices of gasoline and petrol products, speculators are./
Actually, it was Charley Wilson, a member of Eisenhower's cabinet, who was famous for saying: ''What's good for GM is good for the country.''
The FTC and the SEC need to do a major deep dive investigation of oil speculation and market manipulation - not by oil companies - but by commodity traders and market analysts who hold large personal futures, puts and calls.
If the administration were to do anything, they'd have to get the SEC and the FTC to investigate market manipulation by traders and analysts. That's where most of the noise and disinfo are coming from that have been driving the volatility. The volatility has been speculative and has not been driven very much by actual supply and demand fundamentals.
Yup! And I think there is low hanging fruit for federal investigators.
That about covers it. When it oil reached over $60 I stated the funds will take profit, which they did, and they will jack it right back up. After the 4th of July prices should slide backward again and then based on the energy supply government report, which changes, on average, every 3rd day, will rise again.
One way to play the current crude oil market is with both, puts & calls.
Keep an eye on Iran. In the future both eyes will be required.
The are reasons beyond the speculation, like energy stock for the coming winter, the potential instability of leading OPEC suppliers such as Iran, Nigeria, Venezuela, lack of sufficient refining capabilities and the energy funds milking the highs and the reversals across the board in the entire energy sector.
Aw for cryin' out loud kids, why is it that everyone's always trying to make more gov't regs, gov't control, and higher taxes. If anyone here really thinks the price of oil is to high, how about they can go out and help build some more refineries with their own private money like us grown-ups have to do.
How about we have the gov't stick to stuff like defense maybe. Who knows, maybe you can put a real cap on the price of oil and make a few bucks at the same time.
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