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Oil prices - Oct 31

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Oil jumps $4 on Fed, supplies

Steve Hargreaves, CNNMoney
Hits new record of over $94 dollars a barrel as crude stocks fall and interest rates decline.
Oil prices set a new record high Wednesday, jumping over $4 on an expected interest rate cut from the Federal Reserve and dwindling supplies in the United States.

U.S. light crude for December delivery jumped $4.15 to settle at a new record of $94.53 a barrel on the New York Mercantile Exchange, topping Monday's record close of $93.80 a barrel. Prices rose as high as $94.74 in intraday trade, surpassing crude's all-time record trading high of $93.80 a barrel, also set Monday.
(31 October 2007)

The new math of oil

Geoff Colvin, Fortune via MoneyCNN
We're hard-wired to tremble when oil prices rocket, and the past few weeks have looked like another example of why. Whenever stocks fell sharply, as they did several times, traders blamed the fast-rising price of oil.

But that chain of logic is misleading. The bigger picture shows that the relation between oil and the economy is changing, and we'll have to rewire our brains to understand what's happening. Watching oil prices rise and fall is no longer enough; the key now is understanding why they're moving.

You know something strange is going on when you step back and examine the stock market's performance not of the past three weeks but of the past five years. As oil prices have surged, they haven't knocked down stocks or hobbled the economy. Instead just the opposite has happened: Oil has tripled, yet stocks have roared ahead to new records, and the U.S. economy has grown smartly over the whole period. That is not how things work, or so we learned after oil spikes triggered recessions in 1973, 1980, 1981, and 1990.

The critical insight into what's happening comes from Daniel Yergin, chairman of Cambridge Energy Research Associates and a longtime authority on world energy. "This is a demand shock, not a supply shock," he says. "What's causing it is the extraordinary economic growth of the past few years.
(31 October 2007)

OPEC says pumping more won't bring oil price down

James Kanter and Alison Smale, International Herald Tribune
Representatives from top oil producing countries Tuesday blamed the steady advance of oil toward $100 a barrel on a combination of financial speculation, geopolitical instability and a shortfall in refining capacity.

The president of OPEC, Mohammed bin Dhaen al-Hamli, who is also the oil minister of the United Arab Emirates, pledged to keep markets amply supplied. But at an oil industry conference in London, he said there was only so much OPEC could do in the current circumstances to keep a lid on prices.

"Increasingly oil markets are being driven by forces beyond OPEC's control, such as geopolitical events and the growing influence of financial investors," Hamli said. "We are of course concerned about the high level of oil prices."

He declined to say if, or when, the price of oil would reach $100, but he noted that OPEC members already had decided last month to increase output by 500,000 barrels a day from Nov. 1.
(30 October 2007)

Get used to $100 oil, OPEC warns

Neil King Jr. and Guy Chazan, Globe and Mail
Cartel says a tapering off of new supplies will continue for years despite rising demand
LONDON -- Oil at $100 a barrel? That may not be the worst of it.

Several leading oil experts, gathered here yesterday for an annual energy conference, sketched a near-term future in which mounting global demand and shrinking supplies push oil prices well past the $100-a-barrel (U.S.) mark.

Consuming countries, they argued, will simply have to deal with the fact that new pockets of oil are getting far harder and more expense to tap. That, combined with years of underinvestment by the industry, has led to a tapering off of new oil supplies that will continue for years, despite rising energy demand in Asia, the Middle East and some industrialized countries.

Yet on a day when U.S. benchmark oil prices retreated from Monday's record high, closing down $3.15 a barrel, or 3.4 per cent, to $90.38 on the New York Mercantile Exchange, two OPEC ministers at the same gathering insisted that the immediate problem is not too little oil.
(31 October 2007)

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