Opec says oil could hit $200

By Carola Hoyos in London
via Yahoo News
Published: April 28 2008 13:56 | Last updated: April 28 2008 20:03

Opec’s president on Monday warned oil prices could hit $200 a barrel and there would be little the cartel could do to help.

The comments made by Chakib Khelil, Algeria’s energy minister, came as oil prices hit a historic peak close to $120 a barrel, putting further pressure on global economies.

His remarks suggest Algeria wants Opec to continue to resist calls by US and European leaders for the cartel to pump more oil to help ease prices. But Mr Khelil blamed record oil prices on the weak dollar and global political insecurity.

He told El Moudjahid, Algeria’s government newspaper: “I don’t think that an increase in production would help lower prices, because there is a balance between supply and demand and the stocks of gasoline in the United States have recorded a surplus and are at their highest level for five years.”

He added: “The prices are high due to the recession in the United States and the economic crisis, which has touched several countries, a situation that has an effect on the value of the dollar. Each time the dollar falls 1 per cent, the price of the barrel rises by $4 and of course vice versa.”

Some US senators have pinned the blame for high oil prices directly on Opec and Saudi Arabia, its largest and most powerful member.

In a letter to President George W. Bush last week, they said Riyadh had cut its oil production by about 2m barrels a day over the past three years, even though oil prices had continued to rise.

This shows how dumb Americans are. We're dumb collectively, and we elect dumb people to represent us.

The people with the most knowledge, who have taken the time to study oil supply and demand, have said for years that this was coming. They even did a pretty good job of predicting the timing of the energy crisis. But Washington never once listened and never once bothered to do anything about it. They didn't even raise fuel economy standards in this country for 30 years.

We had plenty of time to solve this problem. But we went in the exact opposite direction. And now we'll be lucky if it doesn't end the nation as we know it. Hell, we'll be lucky if it doesn't cause WWIII.

The problem with democracy: when tough and unpopular decisions need to be made those who make them are usually voted out of office. We should have started seriously finding renewable energy sources as a nation after the 70's oil embargo. Here we are 30 years later and the most we can hope for is the oil companies finding ways to extra oil from rock that doesn't destroy the environment in order to keep King Oil going.

The fall of the Empire is getting closer daily, people just don't see it coming. They'll only realize how bad it is one day when they wake up and everything is worthless.

Cause WWIII?

With these predictions, we're approaching or maybe past a critical stage not only here in the US, but around the world and that is a highly possible all hell could break lose at any time over energy and fossil fuels.

Reserves are limited and without oil the military machines are useless and we know what weapons would be deployed in that scenario.

I think it would be better worded as Armageddon.

Like AEN said,

People better wake up before November, if they still have the right to Vote, and take notice on who is going to dedicate their entire Administration to solving the energy crisis in a short term manner, with long term solutions AWAY FROM FOSSIL FUELS or there won't be a future for this Republic at all.

OR

Is it time for the government to come clean about what really lies underneath Gull Island and the waters of Prudhoe Bay in Alaska?

Drama

Oil surges past $122 a barrel
Crude prices continue to surge and one analyst says $200 oil is in sight. Fannie Mae reports a loss and cuts its dividend. Yahoo's Jerry Yang says he is still open to a deal with Microsoft.

Oil topped $122 a barrel this morning and hit an intraday record of $122.47 a barrel after an analyst speculated that oil could reach $200 a barrel in coming months. Oil had set a closing record Monday of $119.97 a barrel.

Oil was up $1.98 to $121.95 by midday today.

Stocks were turning higher by midday, despite the surge in oil prices today. At 1 p.m. ET, the Dow Jones Industrial Average was up 38 points to 13,007. The tech-heavy Nasdaq Composite Index was up 15 points to 2,479, and the Standard & Poor's 500 Index had added 9 points to 1,416.

Oil prices could go as high as $150 to $200 a barrel, Goldman Sachs (GS, news, msgs) analyst Arjun Murti wrote in a note to clients this morning. "We believe the current energy crisis may be coming to a head, as a lack of adequate supply growth is becoming apparent and resulting in needed demand rationing in (Organization for Economic Co-operation and Development) areas, in particular the United States," Murti wrote. "The possibility of $150 (to) $200 per barrel seems increasingly likely over the next six (to) 24 months."

Oil has been on a tear since February, when it first closed above $100 a barrel. The average price of crude oil was $56.71 a barrel in 2005, $66.23 a barrel in 2006, and $72.36 in 2007, according to Bloomberg statistics.
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At the current rate of increase, we could see $200/barrel oil before Summer's over.

Up another $1.62 today.

We'll see $200 before July if this keeps up.

Over $126 as of right now.

Another day, another dollar rise in oil prices.

Another day of trading, and we're at $127.

With the U.S. government refusing to stop putting oil into the strategic reserve, Bush pushing Iran hard on the "nucular" issue, and now Iran threatening to lower oil production, we'll be at war with Iran shortly. Some type of military action in Iran is one good reason to keep putting oil into the reserve while we can, because our military will need that oil if we go in.

Looking more and more like it's possible and will happen.

IF it does happen I think we'll be under a National State of Emergency by November and the Presidential elections will be postponed due to a lack of fossil fuel to power our energy needs......................

I predicted this in a thread a while back. Still hoping I'm wrong.

If Bush stopped the election because of a National State of Emergency brought about by fuel shortages created by him invading yet another Middle Eastern nation, there'd be a full scale revolution in less than an hour.

I hope so, but I'm not optimistic about it. People of all nations love to buy into the whole "we have to do this to remain a strong country, they're our enemies, it's their fault we're having these problems, we must unite to defeat the enemy..." kind of propaganda.

Edit: And for clarity, I said that Cheney would seize command, not Bush.

Not saying I wish for it in the sense you suggest it could happen, but this country sure could use a ballot box revolution.

Unfortunately, the brainwashed masses still think the two major parties have their best interest at heart. More unfortunately, we have 2 good candidates from the major parties for a change.

Why couldn't Paul and Barr run in 2000 or 2004?

I must have missed it, but like you, I hope you're (we're) wrong too.

I mentioned this to Iowa in a phone convo several months ago after I received some (rather alarming) emails from friends currently serving active duty in the Navy. (I can't share much of the content in an open forum)

We kind of came to the conclusion that it was probably just preventive measures however, one friend that has served 6 was scheduled out next month. He's on indefinite hold now until further notice. So I'm re-thinking those emails and events surrounding them now.

We could also hear rumblings of re-instating the draft in short order. IF we do go into Iran, it will go global and China has one hellva military machine.......... and a vested interest in Middle Eastern oil.............

And the timing would be perfect for the gargoyle in North Korea to make a move on the South........


High stakes chess and political posturing at it's finest and no one is paying attention.

Brushing up against $130 today.

$129.58 is the new high. Can we see over $130 by the end of trading?

It traded for $130.22 at 11:56 a.m. London time today.

I'll predict between $135-$140 before the market closes for the holiday weekend Friday.


On another note AEN, we've discussed our "debt based" society at length and how we face a day when debt will cause the total collapse of our economy.

In RE-thinking that situation now, could this be the actual beginning? Is energy the single factor we all over looked?

Over $132.50 right now.

We might just see $140 by the end of the week.

Just cracked $134.

Nearly $5 increase just today.

Oil hits $135 as rally accelerates

By Edmund Conway, Economics Editor
Last Updated: 12:17pm BST 22/05/2008

Oil surged to a record $135 after an unexpected drop in US inventories prompted more investors to join in this year's rally.

Oil for delivery in July hit $135.05 in New York after inventories of crude in the US had their sharpest drop in four months. Brent crude oil also set a fresh record.

The news came as a a Nobel prize-winning economist warned that sky-high volatile prices in oil, food and a swath of minerals are now a permanent feature of the economy.

Michael Spence of Stanford University said that volatile commodity prices were perennial features of the modern economy, but were "worth suffering".

In a further sign that investors are betting on prices staying high well into the future, the cost of buying a barrel of oil for delivery in 2016 rose briefly above $142.

Analysts said that the rise in the oil price was down to a cocktail of factors, including strong demand from emerging economies and poor production performance by oil cartel Opec. However, in an unusual statement, the Bank of England dismissed claims that the recent spike in crude prices was due to speculation.

Qatar's oil minister Abdullah bin Hamad al-Attiyah said that Opec does not have a "magic solution."

"We are producing at our maximum. We don't see a shortage in supply."

Prof Spence, the 2001 Nobel prize-winner, said the price rises in oil and in food, where crops have soared in value in the past year, were "a consequence worth suffering" of globalisation.

"It would be a mistake to view this as a one-time phenomenon," he said.

"This is a natural consequence of higher growth in many developing countries. This isn't just a story about food or oil - it could be about cement, about metals and a whole range of materials.

"Perhaps it will be minerals or uranium, or the costs of logistics and transportation. Either way, I would be very surprised if the relative price of oil and gas fell to the level it did in past years. The rise in energy is semi-permanent."

The warning from Prof Spence, author of a major new report on growth in developing economies, came as crude inventories in the US unexpectedly fell, triggering a fresh rise in the oil price.

The US Energy Department said inventories dropped by 5.4m, or 1.7pc, this month.

Analysts are split on how much of the current oil price reflects actual supply and demand, and how much is speculative froth.

Some suspect the recent rise indicates the oil market has become a bubble, however the Bank of England said in the minutes to its interest rate meeting earlier this month: "According to... market contacts, speculative purchases did not seem to be the prime cause of the recent increases in the oil price.

More fundamental demand and supply factors had probably been at the root of its steep rise during recent months".

It added that while prices were likely to fall back in the coming months, this was unlikely to happen within the "time horizon relevant for current monetary policy" - around two years.

Societe Generale and Credit Suisse have raised their oil price forecasts for this year, while Goldman Sachs warned recently that crude could soar to $200 a barrel.

Chancellor Alistair Darling has pledged to lobby Opec to raise its production levels, but the cartel has said a further increase is unlikely, adding that it should not be held responsible for high prices. It has said that $30 of the recent increase in the price of a barrel is due to speculation.

Could futures markets be the driving force behind today's market?

And where will it go when THAT bubble finally goes bust?

I don't think the futures market is driving current prices so much as current prices have people thinking they can score big on the futures.

My personal oppinion is that people betting on $142 oil in 2016 may well lose thier asses. If oil prices keep their current climb, we'll for sure find other ways to live our lives and find something better to fuel our vehicles with by 2016.

We'll probably see well above $142 for oil prices before 2016, those high prices are what will make sure it's cheaper by then.

Oil's perfect storm may blow over

By Ambrose Evans Pritchard
Last Updated: 3:28pm BST 22/05/2008

Have your say Read comments

The perfect storm that has swept oil prices to $132 a barrel may subside over the coming months as rising crude supply from unexpected corners of the world finally comes on stream, just as the global economic downturn begins to bite.

The forces behind the meteoric price rise this spring are slowly receding. Nigeria has boosted output by 200,000 barrels a day (BPD) this month, making up most of the shortfall caused by rebel attacks on pipelines in April.
Why oil could soon come barrelling down
Keep the motors running: increased oil production from countries such as Brazil, Sudan and Azerbaijan is helping satisfy rising global demand for the fossil fuel

The Geneva consultancy PetroLogistics says Iraq has added 300,000 bpd to a total of 2.57m as security is beefed up in the northern Kirkuk region.

"There is a strong rebound in supply," said the group's president Conrad Gerber.

Saudi Arabia is adding 300,000 bpd to the market in response to a personal plea from President George Bush, and to placate angry Democrats on Capitol Hill - even though Riyadh insists that there are abundant supplies for sale.

Non-OPEC oil production growth

Like the rest of Opec, the Saudis blame "speculators" for running amok, pushing paper contracts into the stratosphere.

The ever-diminishing reserves of oil in the earth's crust will doubtless drive crude prices to much higher levels over time - provided no new technology such as nuclear fusion abruptly changes the picture - but that will not stop cyclical ups and downs along the way.

The world's finely balanced market for crude has been creeping into surplus for several weeks. Opec's monthly report says that demand this quarter will average 85.75m bpd. Supply was 86.8m bpd in April. The fresh output from Nigeria, Iraq and Saudi Arabia may push it significantly further into surplus.

The signs are already surfacing in global inventories. Opec says that stocks held by the OECD club of rich countries are above their five-year average, with "comfortable" cover for 53 days' use. US stocks have edged up for the last four months, though they fell last week.
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# Oil surge may trigger truly open skies
# Read more Ambrose Evans-Pritchard

While it is widely reported that output from the non-Opec trio of Norway, Britain, and Mexico has relentlessly fallen, it is less well known that a clutch of other countries are gradually filling the breach.

The US Energy Information Agency says non-Opec supply will edge up by 600,000 bpd over coming months as Brazil, Azerbaijan and the Sudan raise production. By next year, the US itself will be producing enough extra oil to shave its import needs.

OPEC surplus crude oil production

None of this has been enough to curb the buying frenzy this spring. Goldman Sachs has warned that prices could reach $200 in a final spike, and even the bears at Lehman Brothers say there may be enough momentum to keep the boom going until Christmas.

It is unclear whether hedge funds and investors piling into futures contracts have now become the driving force in a speculative bubble. The Bank of England said yesterday that they were not a factor.

Lehman's latest report - Is it a Bubble? - says commodity index funds have exploded from $70bn (£36bn) to $235bn since early 2006. This includes $90bn of fresh money. Energy takes the lion's share. Every $100m flow of investment money into oil lifts crude prices by 1.6pc, it said.

"We see many of the ingredients for a classic asset bubble," said Edward Morse, Lehman's oil expert.

This week has seen a dramatic surge in oil contracts dated as far forward as 2016. Futures have moved higher than the spot price, a rare event known as "contango". This can cut both ways: either as a sign of an impending supply crunch years hence; or that the futures market has become unhinged from reality.

What we know is that the International Monetary Fund has cut its forecast for world growth for 2008 three times since last autumn to 3.7pc, and the United Nations is predicting just 1.8pc - technically, a global recession. The major oil forecasters have halved their estimates for crude demand growth to 1.2m bpd.

The bulls say that the US housing crash and spreading contagion in Britain, Spain and Japan do not matter much for oil in the changed world of rising Asia.

The US added just 7pc of crude demand growth from 2004 to 2007, compared with 34pc for China, 25pc for the Middle East and 17pc for emerging Asia.

Goldman Sachs argues that fuel prices in most of these countries are held down by state controls, insulating demand from the effect of any global downturn.

But this could change. Egypt - the most populous Arab country - has just raised petrol prices by 40pc. Rumours swept China yesterday that Beijing was preparing to lift fuel prices. While the Chinese government is unlikely to risk protests in the lead up to the Olympics, the jitters are a reminder that Asian states will have to take action sooner or later to wean their societies from subsidies.

Or maybe not.