Posted on 01/14/2005 12:28:55 PM PST by Jomini
Crude futures rose for the fourth day in a row Friday, bringing oil prices to a level not seen since late November as traders pinned a near 7 percent rise in the past week on supply snags and expectations of colder weather.
Light sweet crude for February delivery was up 26 cents at $48.30 a barrel in early afternoon trade on the New York Mercantile Exchange. Last Friday, oil futures settled at $45.43 per barrel.
Other factors contributing to higher prices were the strong dollar, the possibility of another OPEC production cut and fears of more attacks against oil infrastructure in Iraq, analysts said.
Still, some analysts said they believe the latest price runup exaggerates the actual risks in the market and that the supply-demand balance is not as tight as traders suggest.
Robert W. Baird & Co. oil analyst George Gaspar conceded that the global supply cushion is "thin," though he said slower demand growth in 2005 and increased production from non-OPEC countries will ease some of the tensions experienced in 2004.
Global oil demand is expected to rise about 1.8 percent to 84 million barrels a day in 2005, compared with a rise of 3.3 percent in 2004, due to a slowdown in economic expansion.
"I think there's an awful lot of hype in the oil market," Gaspar said.
Maybe so. But Esa Ramasamy, oil editorial manager at Platts, said: "I'm doubtful that it will even go to the $40 mark, there's just too much market support for these prices."
_ In Norway, bad weather prevented Royal Dutch/Shell Group of Cos. from restarting the 140,000 barrel-a-day Draugen field in the Norwegian field. The field was shut down Friday after bad weather prevented repairs to damaged crude oil loading equipment.
_ Temperatures will be below normal next week in the U.S. Northeast, the National Weather Service predicted. Oil traders also are watching for a sustained period of freezing weather in the region that could strain heating oil supplies, which are 7 percent lower than last year at this time.
_ The OPEC meeting scheduled for Jan. 30 is another factor that traders are jittery about. OPEC ministers are to decide whether to decrease production further following a cut of 1 million barrels a day in the start of 2005.
Oil prices peaked last October at more than $55 per barrel, but they remain about 39 percent higher than a year ago.
As a currency Oil is still extremely undervalued to the dollar especially with the coming regime change in Tehran. Early costs of the Osirak style preemptive strike versus nuclear facilities will be heavy to include probable shipping damage.
However should the US and UK indeed commit to the oh-dark-thirty storming of Abu Musa and the Tumbs to negate the expected Iranain retaliation versus the fleet, then the long term cost-benefit in holding this ground and keeping the shipping lanes shielded will be tremendous.
J
Whatever else may be causing this spike in prices, one thing's for sure: it's NOT the "strong dollar" doing it!
If the dollar were in fact "strong," it would take fewer dollars to buy a barrel of crude.
"Esa Ramasamy, oil editorial manager at Platts, said: 'I'm doubtful that it will even go to the $40 mark, there's just too much market support for these prices.'"
Calling all suckers! The oil market can't drop below $40, you just heard it from an expert! Mortgage the house and go long 10 contracts!
Proclamations like this make me want to buy some puts.
I doubt it goes below $40/brl. China's growth and increasing demand is far to strong. I wish the auto industry would start mass producing cars that run on natural gas.
Well, ya better go long then.
Remember, oil only broke $40 for the first time about 9 months ago. For the last 100 years, it's been at 39.99 or below.
And it shall go there again.
This article is just the warm-up. When "experts" start predicting 75 or 80 oil, that pretty much guarantees that the market will tank within a few weeks.
While the price of oil might be able to break $40 again it will be very short lived. Mark this post and tell me how wrong I am two years from now.
Someone found out that they can kick us when we're down and make a killing by manipulating prices...
The fall of the dollar over the past year accounts for some of the raise. I saw one estimate of $4.00 per bbl.
Per the article: "Other factors contributing to higher prices were the strong dollar..."
Maybe they meant the "weak" dollar. Oh, what the heck, it's only journalism--not like a real job.
Right. I can't even keep track of next *week*, much less 2 years from now.
I'm just saying that if you look at a nice monthly chart for commodities, the price goes up and down, up and down. The talking heads generally don't start their hystrionics until after the movement is well underway.
What if the chart wasn't crude? What if it was corn? Or aluminum? Would you also assert that the price would never return (for longer than a brief period) to where it was just one year ago today?
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