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Oil surges as Saudi king dies, refiners struggle (Crude now $62 and rising)
Reuters Canada ^ | August 1, 2005 | Simon Webb

Posted on 08/01/2005 10:34:42 AM PDT by Jomini

Oil prices climbed above $61 a barrel to a three-week high on Monday as the death of Saudi Arabia's King Fahd, a spate of U.S. refinery outages and tensions over Iran's nuclear ambitions rattled the market.

U.S. light, sweet crude rose $1.03 to $61.60 a barrel. The price has climbed 40 percent this year and is approaching the record high of $62.10 hit on July 7.

"It's this combination that serves as a reminder of the market's vulnerability," said a senior energy analyst.

King Fahd died on Monday and will be succeeded by Crown Prince Abdullah, his half-brother who has been the de-facto ruler of Saudi Arabia since Fahd suffered a stroke in 1995.

Abdullah will adhere to Saudi Arabia's long-standing oil policy aimed at ensuring global markets are well supplied, the kingdom's next U.S. ambassador Prince Turki al-Faisal said.

But analysts said markets were jittery over longer term Saudi policy, noting that the new king and Crown Prince were both octogenarians.

"It's this succession struggle and the possible related instability that's the actual concern," one trader said.

REFINERIES UNDER STRAIN

A spate of refinery problems in the United States resurrected concerns about meeting strong fuel demand.

Exxon Mobil added to the anxiety at the weekend as it shut down its 235,000 barrels per day Joliet refinery in Illinois, according to trade sources.

BP also shut down a gasoline-producing unit at the weekend at its giant Texas City refinery -- the third-largest in the U.S. and source of 3 percent of its gasoline -- for maintenance, a regulatory filing showed "Steadily declining inventory levels ahead of the gasoline peak demand season mean that this market has been looking increasingly tight," said Barclays Capital in a report.

Although stockpiles of most fuels are relatively healthy for this time of year, traders fear refiners may be hard-pressed to satisfy rising summer motor fuel consumption while also stocking up enough distillate supplies to meet peak winter consumption.

IRAN TENSIONS

Adding to market nerves, OPEC's second biggest oil producer Iran said it would break U.N. seals on a nuclear plant and resume work that the West suspects could help it build an atom bomb.

The move was in defiance of EU warnings and could see Iran's case sent to the United Nations Security Council for possible sanctions.


TOPICS: Business/Economy; Extended News; Foreign Affairs; Japan; News/Current Events; Russia; United Kingdom; War on Terror
KEYWORDS: kingfahd; oil; walkoffgrandslam
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As allied armies romp to victory after victory in Iraq, the opposition concentrates mass on the vulnerable Western energy jugular. Each day the price of crude increases, the debased dollar weakens further. Joe six pack getting crushed again every week at the pump.

The classic Eastern stretch-and-break attack continues as a major terrorist strike will propel crude into the stratosphere. A year from now $62 will look like a bargain.

J

1 posted on 08/01/2005 10:34:46 AM PDT by Jomini
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To: Jomini

George W. Carter.


2 posted on 08/01/2005 10:45:37 AM PDT by Finalapproach29er (America is gradually becoming the Godless,out-of-control golden-calf scene,in "The Ten Commandments")
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To: Jomini
a spate of U.S. refinery outages

How the HELL do refinery outages raise the price of crude oil? If anything, that means refineries will be buying slightly LESS until the outages are fixed.

There's some serious manipulation going on here...

3 posted on 08/01/2005 10:47:06 AM PDT by dirtboy (Drool overflowed my buffer...)
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To: Jomini
..refiners struggle (to control laughter & glee).
4 posted on 08/01/2005 10:47:37 AM PDT by norraad ("What light!">Blues Brothers)
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To: Finalapproach29er

Seen any gas lines lately ?


5 posted on 08/01/2005 10:52:43 AM PDT by Eric in the Ozarks (Scratch a Liberal. Uncover a Fascist)
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To: Jomini

Read over the weekend via newspaper that CAFTA will result in US exporting billions in petroleum. Maybe the exporting will be temporarily stopped but I won't hold my breath. The American consumers are being gouged horribly so why in the world does the US oil companies and govt want to export petroleum to the central american nations when it could be used at home. Message to the oil companies and to the govt: charity begins at home.


6 posted on 08/01/2005 10:53:46 AM PDT by lilylangtree
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To: lilylangtree

Yes, they know that, just recently refineries were given millions of our taxpayers dollars by heir Humelund Security to beef up security in the form of overpriced fences & out of dated cameras.


7 posted on 08/01/2005 10:57:35 AM PDT by norraad ("What light!">Blues Brothers)
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To: lilylangtree

It seems like a bunch of persons on this web site want to nationalize the US oil industry!


8 posted on 08/01/2005 11:08:05 AM PDT by kaktuskid
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To: norraad

NO LIE!

This is a joke! All refinery units are bought down for maintainence on two to four year cycles. They can only run about four maybe stretching to nearly five years before they have to be shutdown for repair.

The other joke is reducing stocks of gasoline and motor fuels! Would you not expect the stocks to reduce when you are at peak consuption? That is how the refining business operates EVERY year. They build gasoline, diesel and AV / jet fuel inventory in the spring and sell it down in the summer. In the fall they build stockpiles of fuel oils, propane and kero for winter demand and sell it down in the winter to make room for the spring build up of you guessed it! Motor fuels!

It has been a repeating cycle for the 25 years I've worked in refineries...


9 posted on 08/01/2005 11:08:41 AM PDT by El Laton Caliente (NRA Member & GUNSNET.NET Moderator)
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To: Jomini

So, what's the odds on this Abdullah guy? 81? Couldn't walk without Dubya holding his hand......

One thing about high oil prices; it replenishes the Saudi treasury.....helping them and their vital interests....


10 posted on 08/01/2005 11:09:04 AM PDT by swarthyguy
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To: El Laton Caliente
This is also exactly why the fleet average MPG has changed very little & won't until the refinery fraction ratios change.

That's what determines our fleet average MPG, nothing else.

Like mother planning the family meals, nothing left over, nothing to waste.

The car companies dial in the MPG at mothers beckoning.

11 posted on 08/01/2005 11:15:59 AM PDT by norraad ("What light!">Blues Brothers)
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To: Jomini

I don't know why King Faud's death would cause the price of oil to rise. If they plant him, he'll turn into oil eventually, thereby increasing the total supply and reducing the price, right? Well, yeah, granted it'll take a few hundred centuries...


12 posted on 08/01/2005 11:16:43 AM PDT by southernnorthcarolina (I support tax cuts for the rich -- and I vote!)
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To: southernnorthcarolina

Like a rat waiting at the cheese bar, any excuse to pull the lever to up the price will do.


13 posted on 08/01/2005 11:20:23 AM PDT by norraad ("What light!">Blues Brothers)
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To: Eric in the Ozarks

"Seen any gas lines lately ?"

Yes. We had a gas shortage down here. Hard to find gas and if a station had gas, the lines were long. Dennis cut off our supplies. Last week stations started to get gas again.


14 posted on 08/01/2005 11:21:01 AM PDT by imskylark
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To: Jomini

The commodities speculators will use any excuse to bid up oil prices. If I were the President, I'd announce this week that we are in war time and will start rationing gas to x-number of gallons per driver starting Sept. 1. It would be so simple to do with computers keeping a tally on your driver's license number. Talk about a market crash! I'd be delighted to have played a part in the war on terror by putting the Saudis and the oil speculators out of business.


15 posted on 08/01/2005 11:21:26 AM PDT by kittymyrib
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To: Eric in the Ozarks
"Seen any gas lines lately ?"

Actually, yes.

But that was in the panicked "everybody gas up your car" run-up to Hurricane Dennis. The night before the storm arrived you couldn't find gas on Panama City Beach, FL for love or money, and there was not much across the bay in Panama City proper, either.

We've had frequent supply disruptions since. We actually still had some gas stations running out of regular and mid-grade gas as late as last week. (Despite the fact that the Panama City area didn't have any serious damage from the storm.)

Hopefully it's all worked out now.

We've also seen supply disruptions for other things - the baby food sections of the grocery stores kept going almost empty during the 3 weeks following the storm, and stocks of lots of other items (especially dairy products and breads) were frequently low.

Many times I'd go into a normally well-stocked store and see sections of empty shelves scattered throughout.

AFAIK no one here really had to do without anything important, though many of us couldn't find our usual brands/flavors/sizes. I'm sure it was worse farther west (closer to the storm's path), and I know the places that were hard hit by the 4 hurricanes last season had things MUCH worse.

But seeing those "out of gas" signs on the pumps and those empty shelves in the stores does viscerally remind you how dependent you are on the rest of the world for the necessities of daily life.
16 posted on 08/01/2005 11:22:11 AM PDT by lasisra
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To: Jomini
The oil speculation going on is absolutely ridiculous. If someone yells "boo" too loud at an oil rig, the price jumps by 2 bucks.

Something has to be done. The economy can't take much more of this.
17 posted on 08/01/2005 11:23:47 AM PDT by mysterio
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To: dirtboy

Econ 101 my friend. given constant demand for finished product a refinery shut down lowers supply thus prices rise.


18 posted on 08/01/2005 11:24:07 AM PDT by hubbubhubbub
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To: lasisra

The point is, gasoline is plentiful and available, unlike when Jimmah Cahtah was in charge.


19 posted on 08/01/2005 11:24:26 AM PDT by Eric in the Ozarks (Scratch a Liberal. Uncover a Fascist)
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To: imskylark
So, W was responsible for living in a hurricane prone area ?
20 posted on 08/01/2005 11:25:46 AM PDT by Eric in the Ozarks (Scratch a Liberal. Uncover a Fascist)
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