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High oil prices unjustified: Saudi king
People's Daily Online ^ | August 27, 2006 | People's Daily Online

Posted on 08/26/2006 9:14:37 PM PDT by thackney

Saudi King Abdullah bin Abdul- Aziz called on Saturday for moderation in oil price, terming high oil price as "unjustified."

The king was quoted by Saudi-owned Asharq al-Awsat newspaper as saying that Saudi Arabia wanted moderate oil price, despite benefits it would reap from higher prices.

"The kingdom's oil policy is based on moderate prices and despite the benefits higher oil prices bring to us, we call for moderation in oil prices," the king said.

"Oil production is plentiful, so I am puzzled by the fluctuations in the market and the unjustified high oil prices," he added.

Oil price rose on Friday as a tropical weather system brewing in the Caribbean threatened to sweep through the Gulf of Mexico next week. Anxieties over Iran's nuclear issue also fueled the rise.

New York's main contract, light sweet crude for delivery in October, closed up 15 cents at 72.51 dollars per barrel.

Saudi Arabia produces around 9.5 million barrels of oil per day and is the world's top oil exporter.


TOPICS: News/Current Events
KEYWORDS: energy; oil
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To: thackney
That's the report from some analysts. See here
21 posted on 08/27/2006 6:27:55 AM PDT by Timocrat (I Emanate on your Auras and Penumbras Mr Blackmun)
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To: Timocrat
No, the article you linked says:

people who have nothing to do with the oil industry are buying oil futures

Oil futures are not the same as buying and delivering oil. The author confuses the two later in the article. But there is not storage capacity anywhere in the world to make a dent in a 84 million barrel a day market. The largest oil storage facility in the world is the US SPR. The US's SPR average input this year is about 20,000 barrel a day. China's SPR is a small fraction of ours. Where could this oil be going?

22 posted on 08/27/2006 6:39:46 AM PDT by thackney (life is fragile, handle with prayer)
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To: NorCalRepub
we can do both.....drill in ANWAR and accelerate our tech towards other means.

Yep. So many people seem to be exclusively linear thinkers on this subject. As if it is only possible to do one thing at a time to the exclusion of anything else.

I also want to get my bat and bean these lefties that harp about improving energy efficiency. Straw man. Compared to the time of the first embargo, we produce the same unit of goods and/or services using 50% of the energy. That is an astounding improvement. But we produce about half the oil.

The point being that these people are not pro "energy efficiency", they are anti oil and pro government.

23 posted on 08/27/2006 6:40:25 AM PDT by ChildOfThe60s (If you can remember the 60s...you weren't really there.)
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To: kingu

When Shiek Yamani of SA in November 81 predicted lower prices.....at the time 38 dollars on thier way to 42.....it marked a change in direction.......
--The Saudis still carry the biggest oil stick in the world. Look for oil prices to begin falling in about 4-5 months. Big Time!


24 posted on 08/27/2006 6:53:22 AM PDT by stocksthatgoup ("Is it real? Or is it Reuters?")
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To: thackney

the high price of oil is adding more incentive to develop alternatives.
The Saudis want us to stay dependent on them.


25 posted on 08/27/2006 6:55:07 AM PDT by Scotswife
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To: Timocrat

National Peoples Radio analysts might believe this but no reputable economist believes speculation does anything but stabilize markets.


26 posted on 08/27/2006 7:13:24 AM PDT by DManA
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To: thackney

Duuuugh!... Oil companys make more money on higher priced oil.. Thats what oil companys do?... make money.. They are in it for money not oil...


27 posted on 08/27/2006 7:34:47 AM PDT by hosepipe (CAUTION: This propaganda is laced with hyperbole.)
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To: ex-Texan
"Most commodities are fairly predictable."

That is without a doubt the most ignorant statement I have ever read on FR. In fact, commodity prices are highly volatile and extremely unpredictable. You say "Investors buy hog bellies and sell corn and buy coffee every day. Some very astute speculators make a fortune buying low and selling high." True--but completely irrelevant. Many very astute speculators also lose their shirts buying high and selling low. Cf. MotherRock, an energy hedge fund run by two very astute guys that just shut down due to huge losses.

There's an old joke in commodity markets: "Want to make a small fortune trading commodities? Start with a large fortune."

Re the Senate report--it is a farrago of facts, factoids, and falsehoods stitched together to support a pre-determined conclusion. The "evidence" amassed by the Senate committee proves less than nothing--and certainly does not "prove" the claims it trumpets. It is an ugly assemblage of opinion and assertions and non sequitors dressed up as a serious analysis of the energy market.

Re the current oil market. There is no doubt a lot of dirty money involved--but this is not responsible for the current price levels in the market. There's been dirty money in oil trading (and other commodity markets) since time immemorial.

Current oil prices are driven by a tight supply and demand situation compounded by fears--which you mention in your post--that the situation will become worse due to disruptions arising from political instability. These are serious concerns, and hyping the roles of speculation and manipulation (as the Senate report does) is a pointless distraction from attention on the real sources of high prices. Politicians have blamed speculators for high prices since Roman times. It's easy, it's politically profitable (speculators have few admirers)--and it's completely counterproductive.

Financeprof (and current Texan).

28 posted on 08/27/2006 8:29:23 AM PDT by financeprof
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To: financeprof

Sorry, I beg to differ. I have an old eight hour set of video tapes on trading commodities. Those tapes take the position that weather impacts commodities prices. They have not been wrong yet. Hurricane season is sure to raise oil prices. It's hurricane season, right? What is oil doing right now? Going up. Of course there are exceptions. But weather does influence commodities prices and make some trends fairly predictable.


29 posted on 08/27/2006 10:19:05 AM PDT by ex-Texan (Mathew 7: 1 - 6)
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To: thackney
No, the article you linked says: people who have nothing to do with the oil industry are buying oil futures

Oil futures are not the same as buying and delivering oil

I'm not at all sure I understand the point you are making. Are you saying that Investment Banks are part of the oil Industry?

Thank you for enlightening me about the difference between buying spot crude and buying futures contracts.

Let me see if I can try to explain the trade with an example. An investment bank goes out and buys 2,000,000 bbls of Brent @ $72 on the spot market and arranges to store it in a Bahamas terminal for $1.50/bbl for six months. He simultaneously executes a futures contract to sell the crude in six months time at the tehn prevailing price for delivery in six months time of $77.50 therby making a risk free return of over 10 %/annum on his investment. At the end of six months he has the option of instead of buying back the contract immediately before maturity he presents the crude for physical delivery.

The point is that more capital is flowing into the oil market than is necessary to sustain an equilibrium between supply and demand. Of course when the the deal unwinds at the end of the six months, all othe things being equal the price of crude should drop.

An oil futures contract is most certainly a contract for buying oil. If the contract is not bought back before maturity it does in fact become a contract for the sale of oil.

30 posted on 08/27/2006 9:40:19 PM PDT by Timocrat (I Emanate on your Auras and Penumbras Mr Blackmun)
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To: DManA
.. but no reputable economist believes speculation does anything but stabilize markets.

Been watching the housing market lately?

31 posted on 08/27/2006 9:47:06 PM PDT by Timocrat (I Emanate on your Auras and Penumbras Mr Blackmun)
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To: ex-Texan; financeprof
What is oil doing right now? Going up

Ahem. See here

32 posted on 08/27/2006 9:55:13 PM PDT by Timocrat (I Emanate on your Auras and Penumbras Mr Blackmun)
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To: Timocrat

2 million barrels over six months isn't noticeable in the market. That is one hundredth of a percent of the market. My point is there isn't the storage capacity available in the world to make a dent in the market for any duration. Futures contracts are bought and sold all the time. I could care less who is buying and selling. It is an open market and should always be that way.


33 posted on 08/27/2006 10:03:30 PM PDT by thackney (life is fragile, handle with prayer)
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