OPEC deal fails to dent high oil pricesgreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
Thursday June 22 7:33 AM ET
OPEC Deal Fails to Dent High Oil Price
By Tanya Pang
LONDON (Reuters) - Oil prices stayed strong on Thursday as dealers decided a new OPEC deal raising supply by just three percent would do little in the short term to reduce high petroleum import costs in the West.
London Brent crude futures traded up 27 cents at $29.60 a barrel and U.S. light crude was 13 cents higher at $31.50.
Oil analysts said OPEC's cautious output hike, agreed on Wednesday, was unlikely to rein in prices to the $25 level the cartel says it is targeting.
``The market will remain tight and under these circumstances it is highly improbable that prices will retreat back to the mid $20s,'' said John Toalster, director of oil and gas research at SG Securities.
Energy shares, benefiting from the resilient oil price, were top gainers on European bourses. BP Amoco (BPA.L) hit a new record at 653 pence.
Less than 24 hours after the Organization of Petroleum Exporting Countries sealed the deal, officials were talking of the possibility of needing additional barrels later this year.
``It's quite possible we will put more oil on the market if prices stay high for a month or so,'' OPEC Secretary-General Rilwanu Lukman told reporters.
``There is an agreement that if prices go too high for our liking we will do something. Prices appear to be on the high side at the moment,'' Lukman said.
OPEC's output hike, the second this year, raises output by 708,000 barrels a day to 25.4 million bpd from July 1.
Non-OPEC Mexico, which cooperates with OPEC on output policy, announced a 75,000 bpd rise in exports. Norway is expected to increase output by up to 100,000 bpd.
Both countries supported OPEC in implementing production curbs in 1998-1999 to lift oil from less than $10.
Producers began to ease the production restrictions in April after prices surged to highs not seen since the 1990-1991 Gulf crisis.
Little Net New Oil To Market
The latest increase represents less than one percent of world consumption and with fuel stockpiles in the West running low, analysts said that OPEC's latest actions will have little direct impact.
Leakage from current quotas means that net additional OPEC oil to be released to the market will be only be about 400,000 to 500,000 bpd.
``OPEC is being very cautious and there will be insufficient oil. They will need to increase output again in September,'' Toalster said.
OPEC heavyweight Saudi Arabia, the world's biggest producer, said the cartel would defend a target of $25 per barrel for its reference basket of seven crudes.
That basket stood at $29.14 on Wednesday, according OPEC's Vienna headquarters.
``We have a $25 target price, we will try to keep it there, we will do whatever needs to be done, we will watch it like a hawk,'' Saudi Oil Minister Ali al-Naimi told reporters.
He reiterated the view that the relentless price rally was a result of a tight refined products market rather than a shortfall in crude supply.
Naimi is due to hold talks with Norwegian Oil Minister Olav Akselsen on Friday in Oslo. A 13-day strike threatens to close Norway's 3.2 million bpd of crude output and gas production from midnight (2200 GMT) on Friday.
Oil companies have threatened to lock out Norwegian offshore oil and gas workers from two main unions because of the dispute over retirement age.
So far the strike has closed the 225,000 bpd Draugen oilfield and the 60,000 bpd Ekofisk Bravo installation.
The Oslo government, however, has a history of invoking emergency laws to force workers back to their jobs when the nation's output has been threatened.
Crude oil prices in dollars a barrel:
June 22 June 21
-- Cave Man (email@example.com), June 22, 2000
Phil Flynn has been in the Futures Industry since the early 1980s. Specializing in the Energy market both from a fundamental and technical perspective, Phil has been featured in the book The Mind of A Trader.
Lets hear it for the boys! OPEC has made its decision to raise oil production by 708,000 barrels a day! But, wait just a minute...they also said that would include any over production already in the system. So, it looks like well be getting about another 300,000 brls per day give or take a barrel or two. Now when you take into consideration overall worldwide demand is expected to be up one mil brls by the third quarter we start to see this increase isnt even a drop but more like a drip. So guys, it just isnt enough!
Get those investigations underway because this OPEC increase wont do a thing to solve our problems. Al Gore is sreaming collusion by the big oil cos and says GW Bush is in their back pocket. Did AL actually inhale? GW on the other hand is attacking this administration for having no discernable energy policy - or foreign policy for that matter. Got to say Ive been writing this in the Energy Report for quite some time. If GW were President hed be able to sweet talk the OPEC guys into pumping more oil as his Dad is an Arab favorite. GW has said the Clinton Administration has failed in all phases of his energy policy. And who is Clinton passing the buck to? Poor ol Bill Richardson.
Nope, Bill Richardson cant get a break and looks like a dope! Hes taking a tongue lashing from the Senate and most are calling for his resignation. Its not the oil issue but our national security because of the poor handling of a disk containing some of our most sensitive nuclear secrets that have been MIA since March and then turned up under the office copy machine. Honestly, how stupid do these people think we are? Sen Richard Shelby of Alabama says Bill has lost all credibility. No kidding and then some! This should give us all peace of mind next time Mr Richardson goes crawling on his belly to OPEC to beg for more oil.
Oil is the life blood of politics and our economy and the Energy Report has laid this all out for quite some time now. Gasoline has become a major issue in the upcoming Presidential campaign. The states with the highest gas prices may end up determining the winner in November. When crude was around $20, the Energy Report said $30 was in sight and probably high 30s. This has happened. Now Im saying $40 is in sight and probably well see the old Persian Gulf War highs tested. The lack of any significant increase from OPEC has probably laid the groung work for that test. It wont be a straight up move more than likely. Profit taking will always be an issue. But OPEC is not acting to pull prices in and I see the market having nowhere to go but up as demand remains very strong.
The EPA is saying that wholesale prices are down why not the pump price? The API is welcoming the investigation by the FTC as they say they have nothing to hide. Gore cries gouging. GW says its your lack of an oil policy stupid. Ah summer! This is going to be so much fun!
We are long crude from apprx 2930. Stop 2970.
We are long heating oil from apprx 7330. Raise stop to 7530.
We were too jumpy on the unleaded and should have left the stop at 102. Buy August unleaded at 9730 with a 200 pt stop.
Weak injection of natural gas from the AGA yesterday and we got a rally. The close was 4369 up around that resistance and we have congestion between the 4500-4600 area. Want to see the market hold 4000.
Have a GREAT day. Will be on Reuters today around 9am.
-- Cave Man (firstname.lastname@example.org), June 22, 2000.