NationStates Jolt Archive

SAN FRANCISCO (MarketWatch) -- Crude-oil prices hit an all-time high Wednesday, topping $80 a barrel on the New York Mercantile Exchange and sending spasms through the marketplace.
Immediately, consumers smell higher prices at the pump. Retailers, already ailing from subprime fever, fear even weaker sales in the months ahead, economists fret over which metric to use to gauge the economic impact, and policy makers fear the fallout in the polls.
What is remarkable about this latest spike in oil prices is not the usual knee-jerk reaction, but the fact that it comes on the heels of the Organization of Petroleum Exporting Countries' pledge to raise output to take some of the heat off prices. See full story.
Energy traders aren't buying it.
It's not that OPEC is reluctant to raise production. With prices this high, discipline within the group's unruly ranks is not a concern. They were already pumping nearly a million barrels a day above their official quota.
No, the skepticism has more to do with production capacity -- or lack thereof.
The guys on the Nymex trading floor are questioning whether OPEC has the ability to lift output by another 500,000 barrels a day, the number they agreed on at their meeting Tuesday in Vienna.
Hitting their latest production target assumes no serious disruptions -- natural or man-made -- on the drilling rigs, along the pipelines, or in the tanker lanes carrying the crude to market. That's a tall order, given the political instabilities or environmental challenges surrounding many of the world's richest oil fields.
Add a hurricane or typhoon to the mix and prospects look very dicey indeed.
Such uncertainties also lead inevitably to renewed airing of the Peak Oil theory, which posits that the world's petroleum production is at or near an unsustainable high and doomed to drop as demand gradually overwhelms supply.
The oil industry dismisses this as hogwash and continues to offer assurances that it can continue to match supply to demand for decades to come.
But with crude at $80 a barrel, it's clear that fewer futures traders are willing to believe it. In fact, they are increasingly betting against it.

Here she comes.

Here she comes.
Will she be driving six white horses when she comes?

Will she be driving six white horses when she comes?

No. Unfortunatly she'll be riding just four and she'll be pouring her bowls out on the Earth.

It doesn't help, of course, that a 500,000 bpd hike is meaningless given that the nations bound to quotas were already producing more than that amount above the previous level. Really, that's nothing more than a token move that has no downward real effect on prices.

Of course, inventories are also hardly anything to cheer about. A plunge of 7.1 million barrels of crude with only slight rises in products is not good at all, especially given the 200,000 bpd decline in gasoline production. The only really good aspect of recent reports is softening demand, which shows that oil demand has begun to level off in recent years thanks to both the slowing of the housing market and increases in energy efficiency.

However, once $80 is broken, you've got the technical push probably in to the $90-100 range barring a warm winter or a major drop in demand. A good time to buy that Prius, that's for sure...although it's also interesting that the spread between crude and gasoline is so narrow, which may point to a future drop in prices if the inventory situation improves.

It doesn't help, of course, that a 500,000 bpd hike is meaningless given that the nations bound to quotas were already producing more than that amount above the previous level. Really, that's nothing more than a token move that has no downward real effect on prices.

Of course, inventories are also hardly anything to cheer about. A plunge of 7.1 million barrels of crude with only slight rises in products is not good at all, especially given the 200,000 bpd decline in gasoline production. The only really good aspect of recent reports is softening demand, which shows that oil demand has begun to level off in recent years thanks to both the slowing of the housing market and increases in energy efficiency.

However, once $80 is broken, you've got the technical push probably in to the $90-100 range barring a warm winter or a major drop in demand. A good time to buy that Prius, that's for sure...although it's also interesting that the spread between crude and gasoline is so narrow, which may point to a future drop in prices if the inventory situation improves.

World oil demand has not decreased. The pace of growth has slowed somewhat, probably because many third world natiosn have already been priced out of the market.

Global oil product demand has been slightly revised down to 85.9 mb/d in 2007 (+1.7% over 2006) and 88.0 mb/d in 2008 (+2.4%), reflecting weaker-than-anticipated demand in both June and July, largely as a result of high prices and poor weather in OECD countries. The outcome of the recent financial market turbulence remains unclear.

http://omrpublic.iea.org/

World oil demand has not decreased. The pace of growth has slowed somewhat, probably because many third world natiosn have already been priced out of the market.

I was talking about US demand, mainly because the inventories in the US are a big reason for upward pressure on prices.

I was talking about US demand, mainly because the inventories in the US are a big reason for upward pressure on prices.

Because it's fungible, world demand is what matters.

Because it's fungible, world demand is what matters.

In a market this tight, even slight shifts can affect prices considerably.

In a market this tight, even slight shifts can affect prices considerably.

You ain't just bloin' smoke...

http://www.marketwatch.com/?siteid=mktw

Time to move to Sweden http://news.bbc.co.uk/1/hi/sci/tech/4694152.stm

Time to move to Sweden http://news.bbc.co.uk/1/hi/sci/tech/4694152.stm

I've seriously thought about it. If it weren't for the violent culture clashes I think may be going their way I'd do it.