Skip to comments.Oil Hits Fresh Post-War Highs
Posted on 01/09/2004 8:04:48 AM PST by deport
Oil Hits Fresh Post-War Highs
Fri January 9, 2004 07:31 AM ET
LONDON (Reuters) - World oil prices leaped to fresh post-Iraq war highs Friday, driven by fears Arctic weather in the United States will eat into crude stocks that are already at their lowest since 1975.
New York light sweet crude was trading 60 cents higher at $34.58 a barrel, after hitting a peak of $34.63, the highest price since last March, just before the U.S.-led war in Iraq.
In London, Brent futures were 62 cents firmer at $31.70, just down from a nine and a half month peak of $31.80.
Traders said the rally could gather momentum as investment funds read it as a signal to pile into the market.
"This level is extremely important because if we are trading over this the funds will be back in buying again," said John Brady, an oil broker with ABN Amro.
Government data this week showed crude stocks in the United States, the world's biggest oil consumer, had fallen to 269 million barrels, their lowest since 1975.
Colder than normal temperatures have taken hold of the U.S. northeast, the world's biggest market for heating oil, raising the prospect of a further draw down in oil stocks.
NYMEX February heating oil futures rose as high as 100.40 cents per gallon, again the highest level since March.
Weather forecasters AccuWeather and EarthSat said the Northeast would warm up next week, but then turn much colder again.
Oil markets have also found support from the weak U.S. dollar, which OPEC has cited as a reason for sustaining high prices and which has provided an added incentive to buy oil for non-dollar investors.
"We'd be trading around $32.50 if it weren't for the dollar moves," said a London-based broker, who declined to be identified.
While nominal oil prices rose last year to their highest annual average for more than two decades, the dollar sank about 17 percent against the euro and 10 percent against the yen. The dollar has fallen to fresh lows against major currencies this year.
So far the Organization of the Petroleum Exporting Countries has maintained tight supplies, although the cartel's president, Purnomo Yusgiantoro, told Reuters Thursday OPEC would like to see prices lower.
The cartel is set to meet on February 10 in Algiers to consider production policy amid concern among the group that there will be a seasonal downturn in demand in the second quarter.
With oil prices so high, cutting output could prove politically difficult for the group, which has come under fire from the United States for saying high oil prices were justified, given the weakness of the dollar.
U.S. Energy Secretary Spencer Abraham said Friday the U.S. would continue to buy oil for its strategic reserves despite the high prices.
"The volume is very modest and it doesn't affect the markets," he told reporters during a visit to Tokyo.
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That is correct. But the price will not be $34 a barrel.
Why do you say that? Since Iraq is not producing a significant amount of oil at the moment it has little effect on prices. Should it return to large-scale exportation that would probably drive down the price of oil, which is not stability. If terrorist were to start attacking oil production or transportation in other Gulf nations that wold probably drive prices up, which isn't stability either. (Perhaps the troops in Iraq could help fight those other terrorists as well). Finally, if oil production is increased but is not reliable that could lead to swings in prices.
Best thing is not to worry about it.
I personally do not advocate killing all the arabs.
Killing OPEC, on the other hand.......
So long as we print money to pay for Free Drugs for Granny, Free Drugs for Africa, Social Security for Mexico, and the War we will see the same inflationary impact on oil prices as we saw from LBJ's Great Society and Vietnam spending.
The real factor involved, is demand. China will continue to need ever larger supplies, year by year, and the result will be prices in the low to mid $30's.
Only a major debilitating strike on Saudi facilities at Ras Tanura (sp?) would cause wild spikes upward, IMHO.
Shirley yer kidding.
On the contrary, I'm totally serious.
This illegal cartel extracts far too much wealth from the US. That capital in turn, goes to finance terror worldwide & provides the lone pillar of support for numerous regimes who vilify Christians / Christianity.
IMO, the first step should be to peel off Venezuela ... by ANY means necessary.
Encouraging Libya to cheat on its production quota is another possibility. Qaddafi has sent signals (some posted on FR) that he is looking to be more Afrocentric & that adhering to the middle eastern "party line" was a nonproductive foreign policy.
The goal should be: reduce the price of crude to the level where Russia can still extract at a profit, and hold it there.
And DON'T CALL ME SHIRLEY!!!
Those are two important caveats to remember. Once we run out of inexpensive petroleum the alternatives get a lot more expensive and complex. Artifical petroleum may be needed for a variety of products and fuels (we can't fly airliners on batteries), but it will not be cheap nor will it be an original source of energy. On the contrary, it may take more energy o create then it produces. (Some say ethanol is in that category today).
It's worth doing whatever we can to make sure we have a longterm supply of affordable natural petroleum. That includes both conservation and long term planning (like keeping the ANWR off-limits to drilling until we really need it.)
Do you really want to stick with that argument ... comparing OPEC to Harleys?
Ill grant you that HD produces a fine product, & has an extremely loyal customer base. But with all due respect BW, theyre nothing but a niche market & are more aptly compared to Apple Computer.
Now if you had brought up pre divestiture Standard Oil, ATT, or even the DeBeers cartel, then we would have had a basis for intelligent discourse.
You also wrote: How is the cartel illegal?
When applying the same criterion to OPEC that was applied to ATT & Standard Oil, its only logical to suggest that the same conclusion would be drawn.
Now before you get your skivvies all in a wad, and start yelling but theyre not in the US, we cant judge them by our standards, let me run this thought past you.
The same countries / culture who see it as perfectly just to collude in controlling the price of a fungible product, crude oil, also champion the practice of honor killings.
By the laws & ideals with which I was raised, the two practices mentioned herein are both reprehensible and illegal.
Does that answer you question?
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