Crude price has dropped to a little below $95, following increase on speculation of boost in crude output.
The speculation, is coming for the second time this year, as investors speculate an increase in production output, as record price threatens to stifle economic growth.
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Preparing for the December 5 meeting, Saudi Arabia, the biggest producer in the OPEC list pumping nine million barrels a day, oil Minister, Ali al-Naimi, said in Singapore yesterday that October production averaged 8.75 million barrels a day, according to estimates compiled by Bloomberg.
According to the agency report, a senior broker at MF Global Limited in London, said "signs that OPEC is delivering on its promise to provide more barrels are taking the edge off prices on Tuesday."
He said our concern is the demand scenario, high prices and a slowing global economy, which suggest that the desire for crude oil could fade. Crude oil for January delivery fell as much as $2.46, or 2.5 per cent, to $95.24 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
Crude traded in New York fell 48 cents, or 0.5 per cent, to $97.70 a barrel on Monday. It reached $99.29 on November 21, the highest since trading began in 1983.
Tony Nunan, Risk Manager for Mitsubishi Corp, said OPEC has been making a lot of noise about an output increase and that ís why we see weak numbers."
Technical factors were also pressuring the market after prices surged to a record of $99.29 a barrel last week, traders said.
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"The market is taking a breather from this $100 talk, I wouldn't read too much into this sell-off," a London-based trader said.
Al-Naimi said the kingdom, the world's top exporter, had raised production to nine million bpd, slightly more than its target under an OPEC deal, to boost output from November 1.
Wednesday, November 28, 2007
Monday, November 19, 2007
Oil prices rose Monday with more talk among OPEC members about converting their cash reserves to the euro and away from the U.S. dollar.
There is also doubt a possible OPEC output hike next month would get more supplies to market in time for the northern winter.
Fresh purchases of the new Nymex expiry — the December contract expired Friday — were also behind some of the gains.
Light, sweet crude for January delivery rose 81 cents to $94.65 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract rose $1.77 to settle at $93.84 a barrel on Friday.
In London, January Brent crude futures added 53 cents to $92.15 a barrel on the ICE Futures exchange.
New comments about the dollar arose during a weekend summit, where the heads of state of the Organization of Petroleum Exporting Countries sought to find ways to mitigate the adverse impact the battered U.S. currency has had on revenues.
Oil is priced in U.S. dollars and the currency's depreciation has contributed to rising crude prices and eroded the value of dollar reserves. Cartel officials have resisted pressure to increase oil production to ease prices.
"The fact that the OPEC members are talking about issues like the weak U.S. dollar and not talking about raising output is supportive of strong pricing and so we're seeing signs of the market gaining strength," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Iranian President Mahmoud Ahmadinejad, in Riyadh, Saudi Arabia, called the dollar a "worthless piece of paper," and said the cartel's members have expressed interest in converting cash reserves into a currency other than the U.S. dollar — a sentiment echoed by Venezuelan President Hugo Chavez, who called the euro a better option.
There had been speculation over whether OPEC would raise production at the meeting following recent oil price increases that have closed in on $100 a barrel. U.S. Energy Secretary Samuel Bodman had called on OPEC to raise output last week, but cartel officials say they will hold off any decision until the group meets next month in Abu Dhabi in the United Arab Emirates.
Some analysts say a decision to increase output next month is unlikely to strengthen supplies to meet peak winter demand season.
"Even if the OPEC ministers decide to raise output in early December, that would likely become effective only in January so by the time the oil gets to the market, the winter season would essentially be over," Shum said.
OPEC officials have also cast doubt on the effect any output hike would have on oil prices, saying the recent rise has been driven by the falling dollar and financial speculation by investment funds, rather than any supply shortage.
In other Nymex trading, heating oil futures gained 1.79 cents to $2.6050 a gallon (3.8 liters) while gasoline futures added 1.56 cents to $2.3910 a gallon.
Natural gas futures jumped 7.2 cents to $8.073 per 1,000 cubic feet
There is also doubt a possible OPEC output hike next month would get more supplies to market in time for the northern winter.
Fresh purchases of the new Nymex expiry — the December contract expired Friday — were also behind some of the gains.
Light, sweet crude for January delivery rose 81 cents to $94.65 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract rose $1.77 to settle at $93.84 a barrel on Friday.
In London, January Brent crude futures added 53 cents to $92.15 a barrel on the ICE Futures exchange.
New comments about the dollar arose during a weekend summit, where the heads of state of the Organization of Petroleum Exporting Countries sought to find ways to mitigate the adverse impact the battered U.S. currency has had on revenues.
Oil is priced in U.S. dollars and the currency's depreciation has contributed to rising crude prices and eroded the value of dollar reserves. Cartel officials have resisted pressure to increase oil production to ease prices.
"The fact that the OPEC members are talking about issues like the weak U.S. dollar and not talking about raising output is supportive of strong pricing and so we're seeing signs of the market gaining strength," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Iranian President Mahmoud Ahmadinejad, in Riyadh, Saudi Arabia, called the dollar a "worthless piece of paper," and said the cartel's members have expressed interest in converting cash reserves into a currency other than the U.S. dollar — a sentiment echoed by Venezuelan President Hugo Chavez, who called the euro a better option.
There had been speculation over whether OPEC would raise production at the meeting following recent oil price increases that have closed in on $100 a barrel. U.S. Energy Secretary Samuel Bodman had called on OPEC to raise output last week, but cartel officials say they will hold off any decision until the group meets next month in Abu Dhabi in the United Arab Emirates.
Some analysts say a decision to increase output next month is unlikely to strengthen supplies to meet peak winter demand season.
"Even if the OPEC ministers decide to raise output in early December, that would likely become effective only in January so by the time the oil gets to the market, the winter season would essentially be over," Shum said.
OPEC officials have also cast doubt on the effect any output hike would have on oil prices, saying the recent rise has been driven by the falling dollar and financial speculation by investment funds, rather than any supply shortage.
In other Nymex trading, heating oil futures gained 1.79 cents to $2.6050 a gallon (3.8 liters) while gasoline futures added 1.56 cents to $2.3910 a gallon.
Natural gas futures jumped 7.2 cents to $8.073 per 1,000 cubic feet
Monday, October 29, 2007
SINGAPORE (AP) -- Oil prices rose above $93 a barrel to a new trading high in Asia Monday on growing political tensions in the Middle East, a weak dollar and worries about the supply outlook ahead of the winter.
Oil prices have risen more than seven percent since Tuesday.
"The strong price is due to supply concerns in general, on top of which we have the geopolitical news," said Victor Shum, a Singapore-based energy analyst with Purvin & Gertz.
Light, sweet crude for December delivery rose as much as $1.34 to $93.20 a barrel, a new intraday record, in early afternoon Asian electronic trading on the New York Mercantile Exchange, before slipping back to $93.05.
That was still up $1.19 from Friday's record close of $91.86 a barrel. The previous trading high was $92.22 a barrel, set Friday.
A rumbling of tensions in the Middle East has worried traders about the disruption of oil exports.
A sharp escalation in fighting between Turkey and Kurdish rebels has brought Turkey to the brink of sending troops south across the border into Iraq, and the United States last week announced harsh penalties against Iran -- the world's fourth largest oil producer -- in hopes of raising pressure on the world financial system to cut ties with Tehran.
Also, last Friday, gunmen in speedboats kidnapped six workers from an oil vessel off Nigeria's coast, the second attack on an oilfield in a week. Nigeria is Africa's largest oil exporter and the fifth-largest supplier of crude to the United States.
The dollar's descent against major currencies has drawn investors to crude futures as a hedge against the weakening currency and made dollar-denominated oil futures less expensive to people dealing in other currencies, said David Moore, commodities strategist with the Commonwealth Bank of Australia in Sydney.
Meanwhile, U.S. supplies seem to be tightening. Oil futures have gained almost $8 a barrel, or 9 percent, since the U.S. Department of Energy reported last Wednesday a sharp drop in the country's crude stocks.
"The (Energy Information Administration) data last week that showed a drop in U.S. oil inventories has renewed focus on the possibility of tightening oil market conditions, particularly over the northern winter," Moore said.
Analysts note the price of oil is closing in on the inflation-adjusted highs hit in early 1980. Depending on the adjustment, a then $38 barrel of oil would be worth $96 to $101 or more today.
In London, December Brent crude advanced $1.18 cents to $89.87 a barrel on the ICE futures exchange.
Heating oil futures rose 1.75 cents to $2.45 a gallon Monday while gasoline prices added 1.51 cents to $2.2891 a gallon.
Oil prices have risen more than seven percent since Tuesday.
"The strong price is due to supply concerns in general, on top of which we have the geopolitical news," said Victor Shum, a Singapore-based energy analyst with Purvin & Gertz.
Light, sweet crude for December delivery rose as much as $1.34 to $93.20 a barrel, a new intraday record, in early afternoon Asian electronic trading on the New York Mercantile Exchange, before slipping back to $93.05.
That was still up $1.19 from Friday's record close of $91.86 a barrel. The previous trading high was $92.22 a barrel, set Friday.
A rumbling of tensions in the Middle East has worried traders about the disruption of oil exports.
A sharp escalation in fighting between Turkey and Kurdish rebels has brought Turkey to the brink of sending troops south across the border into Iraq, and the United States last week announced harsh penalties against Iran -- the world's fourth largest oil producer -- in hopes of raising pressure on the world financial system to cut ties with Tehran.
Also, last Friday, gunmen in speedboats kidnapped six workers from an oil vessel off Nigeria's coast, the second attack on an oilfield in a week. Nigeria is Africa's largest oil exporter and the fifth-largest supplier of crude to the United States.
The dollar's descent against major currencies has drawn investors to crude futures as a hedge against the weakening currency and made dollar-denominated oil futures less expensive to people dealing in other currencies, said David Moore, commodities strategist with the Commonwealth Bank of Australia in Sydney.
Meanwhile, U.S. supplies seem to be tightening. Oil futures have gained almost $8 a barrel, or 9 percent, since the U.S. Department of Energy reported last Wednesday a sharp drop in the country's crude stocks.
"The (Energy Information Administration) data last week that showed a drop in U.S. oil inventories has renewed focus on the possibility of tightening oil market conditions, particularly over the northern winter," Moore said.
Analysts note the price of oil is closing in on the inflation-adjusted highs hit in early 1980. Depending on the adjustment, a then $38 barrel of oil would be worth $96 to $101 or more today.
In London, December Brent crude advanced $1.18 cents to $89.87 a barrel on the ICE futures exchange.
Heating oil futures rose 1.75 cents to $2.45 a gallon Monday while gasoline prices added 1.51 cents to $2.2891 a gallon.
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