Posted on 08/01/2005 10:34:42 AM PDT by Jomini
Oil prices climbed above $61 a barrel to a three-week high on Monday as the death of Saudi Arabia's King Fahd, a spate of U.S. refinery outages and tensions over Iran's nuclear ambitions rattled the market.
U.S. light, sweet crude rose $1.03 to $61.60 a barrel. The price has climbed 40 percent this year and is approaching the record high of $62.10 hit on July 7.
"It's this combination that serves as a reminder of the market's vulnerability," said a senior energy analyst.
King Fahd died on Monday and will be succeeded by Crown Prince Abdullah, his half-brother who has been the de-facto ruler of Saudi Arabia since Fahd suffered a stroke in 1995.
Abdullah will adhere to Saudi Arabia's long-standing oil policy aimed at ensuring global markets are well supplied, the kingdom's next U.S. ambassador Prince Turki al-Faisal said.
But analysts said markets were jittery over longer term Saudi policy, noting that the new king and Crown Prince were both octogenarians.
"It's this succession struggle and the possible related instability that's the actual concern," one trader said.
REFINERIES UNDER STRAIN
A spate of refinery problems in the United States resurrected concerns about meeting strong fuel demand.
Exxon Mobil added to the anxiety at the weekend as it shut down its 235,000 barrels per day Joliet refinery in Illinois, according to trade sources.
BP also shut down a gasoline-producing unit at the weekend at its giant Texas City refinery -- the third-largest in the U.S. and source of 3 percent of its gasoline -- for maintenance, a regulatory filing showed "Steadily declining inventory levels ahead of the gasoline peak demand season mean that this market has been looking increasingly tight," said Barclays Capital in a report.
Although stockpiles of most fuels are relatively healthy for this time of year, traders fear refiners may be hard-pressed to satisfy rising summer motor fuel consumption while also stocking up enough distillate supplies to meet peak winter consumption.
IRAN TENSIONS
Adding to market nerves, OPEC's second biggest oil producer Iran said it would break U.N. seals on a nuclear plant and resume work that the West suspects could help it build an atom bomb.
The move was in defiance of EU warnings and could see Iran's case sent to the United Nations Security Council for possible sanctions.
I am with you there.
What do you suggest ?
How the HELL do refinery outages raise the price of crude oil?
You tell me and we'll both know. Yet it seems to be received wisdom in the financial press. I'm with you, it is completely absurd on its face. I've read statements just like this on the front page of the wall street journal, who you think/hope would know better.
Bush, Hell! It's CARTER'S fault.
I'm tired today. I'll offer a brief list:
The speculators need to feel fear. W didn't even bother to threaten to open the SPR. The price is being kept artificially high by speculators using oil as a hedge.
National Acadamy of Sciences said raising CAFE by 2 (measley) MPG's would save a million BBL/day. (No safety reduction)
How about calling in some favors for the 22 Billion in foreign aid?
How about leaning on those mutts in Saudi-instead of holding their hands,literally.
How about having the Russians start providing us oil since they have been taking Billions of our welfare and Nunn-Lugar money for a decade.
How about lifting a finger to get a rifinery built in the USA. (He finally got 1 in the SW recently, but we need about a half dozen more).
The point is that GWB letting the market "sort it out" doesn't cut it with me. I would like to see some effort.
What?
The magic number is 84 Mb/d. That is the world capacity of the oil producers and also the demand of the market. Oil production capacity can be increased a little, but at a price. One Mb/d is way short of 5%.
If the U.S. companies exported 100% of their oil it wouldn't change the price. Price is a function of global supply and demand. You'd have the same amount of oil at the same price regardless of how much you import and export...except for Cuba which gets subsidied by Venezuela, but what would you expect from Marxists.
"If I were the President, I'd announce this week that we are in war time and will start rationing gas to x-number of gallons per driver starting Sept. 1."
Go to hell!!!!
It reminds me of how much pharmaceuticals cost for US citizens.
I thought we used just over 20 million/day- witch would make 1 mill just under 5% of US usage.
That's what I was comparing. I'm by and large for freedom when it comes to conservation, Cafe,Etc. , the status quo is no longer acceptable.
When people with a tight budget(me) get spanked by these high prices, maybe its time to take modest actions.
Got to look at the world. The US is important, but it is only 1/4 of the world usage.
"So, W was responsible for living in a hurricane prone area ?"
Were did that come from? I just said that we were seeing long lines at the stations. I was honestly saying it as a tease. I meant nothing by it.
Just kiddin !
ROFLMAO
the Sky falls ...
You have the breathless doom-n-gloom down to an art form!
'It has been a repeating cycle for the 25 years I've worked in refineries... '
okay, since we haven't found the almost free and abundant fuel, (yet) why hasn't the refining procedure been Manhatten - Project -ed and the cost of setting up new refinaries thus reduced?
Thanks for setting the record straight. I've been in the O&G exploration business for 28 years and can easily remember $10 crude and $1.35 Natural Gas. Most fools on these energy threads don't have a friggin' clue.
Great response Eric
No free lunch....don't like the prices----hang an environmentalist.
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