Saudi Arabia insists oil prices unrealistic

[Xtremehkr]

Link (http://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=3&article_id=13238)

BEIRUT: Saudi Arabia broke ranks with the rest of OPEC on Monday by insisting that current crude oil prices are "unrealistically high." Adel al-Jubeir, a foreign affairs adviser to Saudi Crown Prince Abdullah, told a news briefing on Saudi security measures that "we don't see shortage in the physical supply of crude oil." He added that global markets are "fairly stretched out" due to shipping pressures to meet rising demand in China, India and the United States.

"We will make our oil available" to customers, said Al-Jubeir. Current prices are "unrealistically high," he added.

Meanwhile, Iran's OPEC representative said OPEC member states are "satisfied" with current crude prices and production levels are likely to remain unchanged when the cartel meets again next week.

"We are satisfied with the current price level and we don't think we should go back to the price range of $25 a barrel," Hossein Kazempour Ardebili told reporters in Tehran.

"We are all agreed and recognize the suspension of the ($22 to $28) price band," which the Organization of Petroleum Exporting Countries tried to implement before prices shot up last year, he said.

"At the same time we tacitly go along with the market fluctuation and we are all agreed that changing the prices under the current situation is not appropriate." Ardebili told reporters that ministers from the 11-nation cartel were all but certain to leave production unchanged when they meet on March 16 in the Iranian city of Isfahan.


"The function of increasing the oil production quota is probably not relevant given the fall in demand in the second quarter of the year ... it does not make sense to add another million barrels to the supply. at least in the short term.

"If we cut now, this may send the wrong signal to the market," said Kazempour.

He acknowledged that a decision on the appointment was unlikely at the Isfahan meeting but said Iran did not want to see it "politicized."

Algeria's Energy Minister Chakib Khelil said there was little OPEC could do to bring down prices. Most cartel members are already pumping at capacity to meet strong demand.

"For OPEC to increase supplies is not going to have any impact on the price as we are really governed by factors other than supply. As far as I am concerned, OPEC is not going to have any impact on prices," said Khelil.

"The concerns are more with uncertainties related to the geopolitical situation. With these uncertainties you have the big actions of speculators who have taken very long positions," he added.* - with Agencies

So why are prices so high? Conservatives have been claiming lately that the fact that oil prices are so high is proof of us not having invaded Iraq for Oil. Um, apparantly the supply has nothing to do with the price when they think they can get away with charging twice as much.

But really, why are prices so high?

[zimv20]

forgive my ignorance on the matter, but in what currency are the prices set? if it's the euro, then perhaps the weak dollar may explain at least some of it.

[skunk]

Oil is always priced in US dollars. Of course, that means that for us, as the dollar falls, the impact is less.

[IJ Reilly]

And as the dollar falls, the oil producing nations get less in world currencies for every barrel they pump; therefore, OPEC has a greater incentive to keep the price high. The rising price of oil is partially a function of the declining value of the dollar.

[mactastic]

Petroleum supply is also far from the only factor in pump prices. AFAIK, there is a refining capacity problem in the US, particularly as it relates to low-sulphur petroleum. In addition, we are now entering the transition phase between winter and summer formulations.

I do find it interesting that the Iranian faction of OPEC seems happy with the current prices, particularly in light of the article that was recently posted here about the Iranian desire to set up a seperate oil market outside the London exchange.

[Xtremehkr]

I didn't realize the dollar had lost half its value. These prices are artificially high in my opinion. Probably won't come out for years to come though.

[diamond geezer]

Link (http://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=3&article_id=13238)



So why are prices so high? Conservatives have been claiming lately that the fact that oil prices are so high is proof of us not having invaded Iraq for Oil. Um, apparantly the supply has nothing to do with the price when they think they can get away with charging twice as much.


It's not about the US getting cheap oil, petrol companies have been announcing record profits and what's good for them is good for the criminals running your Government.

[Xtremehkr]

It's not about the US getting cheap oil, petrol companies have been announcing record profits and what's good for them is good for the criminals running your Government.

Yeppers, Chevron posted its highest profits in its 125 year history. Puts things in a whole different perspective doesn't it?

[Hoef]

Link (http://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=3&article_id=13238)


But really, why are prices so high?

It is 70% colder than normal in Europe and US NorthEast was colder too .... This greatly impacts demand for oil.

[skunk]

And of course demand is rocketing in India and China. Market Forces, dear boy, Market Forces! :cool:

[Xtremehkr]

And what about the part concerning the record profits all around? Collateral damage?

Link (http://www.findarticles.com/p/articles/mi_go1505/is_200411/ai_n7463044)

ChevronTexaco has followed in the footsteps of its big oil rivals, announcing Friday a 62% rise in third-quarter net income.

Link (http://www.forbes.com/markets/2005/01/31/cx_ab_0131video2.html)

NEW YORK - In the headlines this afternoon, it's been a record quarter and year for Exxon Mobil.

The oil giant raked in $8.42 billion in the fourth quarter and more than $25 billion for all of 2004, both record-high profits in its history. Exxon Mobil (nyse: XOM - news - people ) blew away Wall Street forecasts, as higher oil and natural-gas prices offset a slight dip in production.

U.S. stocks were higher at midday, amid a slew of merger news. U.S. Treasuries traded lower on generally-upbeat economic data, while the greenback slipped against the euro, but climbed against other major currencies. New-home sales rose 8.9% in December, to just below 1.1 million homes. The gain is better than November's 12.1% drop, but less than the 1.2 million home sales Wall Street expected.

Link (http://news.bbc.co.uk/2/hi/business/4231693.stm)

Shell pumps out record UK profit

High oil prices boosted Shell's profits in 2004


Soaring oil prices last year have helped Shell report a record annual profit for a UK-listed company.

The Anglo-Dutch energy giant generated income after tax of $17.5bn (£9.3bn) in 2004, up 38% on the year before.

However, Shell also said it was downgrading its proved energy reserves for 2003 by 1.4 billion barrels.

Shell reduced its reserves several times in 2004, leading to the departure of its three most senior executives including chairman Sir Philip Watts.

'Extreme year'

The record profits were fuelled by the surge in crude oil prices in 2004 which hit more than $55 a barrel last October.


"2004 was a year of extremes with the reserves reorganisation on the one hand and record net income and cash generation on the other," said chief executive Jeroen van der Veer.

In light of the bumper profits, Shell intends to pay out $10bn in dividends to shareholders in 2005.

However, the market responded cautiously to Shell's figures and its shares finished down 1.7% at 471.75p.

Analysts said a likely fall in oil prices this year and the difficulty Shell could face in boosting its reserves would make 2005 a much harder year.

Link (http://www.nzherald.co.nz/index.cfm?c_id=62&ObjectID=10114129)

Oil: Demand falls amid warmer US weather

*
08.03.05 8.40am
*

Oil prices fell on Monday as warmer weather slowed US heating oil demand, easing supply concern as several Opec countries said they saw no need for producers to increase output.

US light crude slipped 44 cents to US$53.34 a barrel, over US$2 below last October's record US$55.67 but still near four-month highs.

The fall came as warmer weather slowed the call on heating oil supplies in the US Northeast, the world's largest heating oil market. Even though colder conditions were expected to return later this week, investors took the milder weather as a cue for profit-taking on Monday.

A cold snap in the US and in Europe helped spur a price rally of nearly 18 per cent over the past month.


A cold "snap."

Link (http://www.energybulletin.net/3231.html)

Expert says Saudi oil may have peaked...

A letter from oil exploration insider...

Staring down the barrel of a crisis...

Transatlantic alliance to secure fuel supplies...

China's Oil Diplomacy in Latin America...

Nov. 18 (Bloomberg) -- The Organization of Petroleum Exporting Countries, producer of more than a third of the world's oil, cut its estimate for the growth in world demand this year and next as high prices hurt economic growth.

World consumption will rise by 2.5 million barrels a day, or 3.2 percent, this year to 81.74 million barrels a day, OPEC said in a monthly report, lowering the annual increase by 120,000 barrels a day from its previous forecasts. Next year, demand will grow by 1.49 million barrels a day, or 1.8 percent, compared with the 1.61 million-barrel, 2 percent gain it projected a month ago.

The 2004 demand reduction was ``to account for the slowdown in Chinese consumption in the second half of the year as well as expected lower apparent demand in the former Soviet Union due to the slower pace of economic activity,'' said the report from OPEC's Vienna headquarters.


Oil demand is up, which cannot be a surprise given that the industry does moniter these things. Demand has not increased by an exponential amount though.

Though profits have increased by close to 100% for some companies! Hmmm. How fortunate.

[skunk]

Collateral Earnings.

[Desertrat]

To add another "bit": I ran across a squib in browsing around that large institutional investors are buying into the commodities markets. This includes the oil market.

These high prices are in the spot market; many transactions are priced under long-term contracts which won't be affected until contract-renewal time. The spot market is greatly affected by fears of uncertainty in supply. Uncertainty includes political stuff--Venezuela, e.g.--as well as sabotage of facilities in places as disparate as Iraq and Colombia. Any vertically integrated oil company is in fat city.

Commodities in general are in a bull market, particularly when looked at in dollar terms. In Euros, it's less of a problem. The dollar has gone from 83 ¢ per Euro to $1.32, a 60% loss in buying power for us. In Euros, the California housing market is near static. :)

The doubling of the world price for steel, due in large part to infrastructure investments in China and other Asian countries, has not yet shown up in consumer items--but it will. The same holds for many other materials.

On the demand side for oil, China has gone from being an oil-exporting nation to one of imports. They now exceed Japan and are second only to the U.S. Other countries are using more oil as their own economies continue to grow.

Seat of the pants, my own opinion is that if "uncertainty" is taken out of the equation, the probable floor for oil prices is around $40 a barrel. I don't see any lessening of transportation needs on a world basis that would lead to enough reduction in demand to allow lower pricing. But, just my 2¢...

'Rat

[Xtremehkr]

Link (http://www.mercurynews.com/mld/mercurynews/business/11065433.htm)

For years, if not decades, the Bay Area has had a problem building enough homes to keep up with demand. Land is restricted and expensive, homeowners tend to oppose developments that could crowd local streets and cities often prefer commercial development to residential development, which generates less tax revenue and requires more services.


Add extremely low mortgage rates to the equation, and demand vastly outstrips supply.


In addition, real estate professionals say many of their buyer clients would rather invest in real estate than in the stock market.


A Mercury News study showed that Bay Area residents bought 13,720 homes outside of the nine-county area and in Western states in the first eight months of 2004, twice as many as during the same period in 1999.


Data from the National Association of Realtors indicates the investment fever is still running high nationwide. A study released last week showed that a record 2.82 million second homes were purchased in the United States last year, up 16 percent from 2003. U.S. home sales overall rose 9.4 percent.


``It's trite, but the low interest rates and lack of other meaningful returns in the stock markets probably have helped buoy this,'' said Steve Delva of Standard Pacific Homes.


Interest rates would need to go above 7 percent before there would be a ``pronounced effect'' on the housing market, Delva said.


``I really feel that California will never, ever be able to satisfy the demand'' for housing, he said.

More on that post later though.

[Desertrat]

""I really feel that California will never, ever be able to satisfy the demand'' for housing, (Delva) said.'

Hmmm. From earlier comments, he doesn't believe interest rates will ever rise to or above seven percent. Good. There will never be any inflation; the rise in prices of steel and copper and cement will never affect the prices of consumer items or construction materials--and jobs will continue to pay ever-higher wages.

In the 1970s, oil prices were expected to continue an ever-upward path. The oh-so-smart bankers practically begged Mexico to borrow money, to be repaid from sales of oil from the new Campeche strike. The Houston real estate market boomed.

Oops. Things changed. I note that while the types of change varies, the fact of change is the only constant.

Maybe I'm too affected by what I've read of economic histories. Maybe I'm too affected by family/friends' comments about the 1930s. Maybe I'm too affected by what I read about the emerging economic behaviors and strengths of formerly backward nations, in the global competition for resources. Sobeit: I just don't see these good times rolling on forever. I wish it could be so, of course; I bear no ill will toward anybody. But it's not engraved in stone that the U.S. will forever be able to have an unending Saturday night spree...

'Rat

'Rat

[skunk]

I just don't see these good times rolling on forever. I wish it could be so, of course; I bear no ill will toward anybody. But it's not engraved in stone that the U.S. will forever be able to have an unending Saturday night spree...

'Rat

'Rat
So true, 'Rat 'Rat! :)
That's going to be the hardest thing to swallow.

[Desertrat]

I don't remember the poem perzackly, but sumpn like:

"I light my candle at both ends;
It will not last the night.
But, ah, my foes and ah, my friends,
It makes a lovely light!"

My jaundiced view has it that some folks are also lighting that sucker in the middle.

:), 'Rat