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Oil Rises Above $134 on U.S. Supply Drop, Bank Price Forecasts
Mark Shenk, Bloomberg
Crude oil rose to a record above $134 a barrel as U.S. stockpiles unexpectedly dropped and banks raised price forecasts because of supply constraints and demand growth.
Inventories fell 5.32 million barrels to 320.4 million last week, the biggest drop in four months, the Energy Department said. Oil for December 2016 delivery rose more than $20 a barrel, or 17 percent, after Goldman Sachs Group Inc. on May 16 raised its outlook to $141 a barrel for the second-half of the year.
“What we have here is a situation where essentially higher prices aren’t generating any more supply,” Paul Sankey, an analyst at Deutsche Bank Securities in New York said in an interview with Bloomberg radio. “What we have to do is keep pricing the commodity higher until demand starts falling,” which “is around $150 a barrel.”
(21 May 2008)
An Oracle of Oil Predicts $200-a-Barrel Crude
Louise Story, New York Times
Arjun N. Murti remembers the pain of the oil shocks of the 1970s. But he is bracing for something far worse now: He foresees a “super spike” – a price surge that will soon drive crude oil to $200 a barrel.
Mr. Murti, who has a bit of a green streak, is not bothered much by the prospect of even higher oil prices, figuring it might finally prompt America to become more energy efficient.
An analyst at Goldman Sachs, Mr. Murti has become the talk of the oil market by issuing one sensational forecast after another. A few years ago, rivals scoffed when he predicted oil would breach $100 a barrel. Few are laughing now.
(21 May 2008)
Oil for 2016 Delivery Passes $141 on Supply Concern
Margot Habiby, Bloomberg
Oil prices are heading to more than $141 a barrel in the next eight years, according to futures contracts on the New York Mercantile Exchange, on concern that growth in supply may fail to keep pace with rising demand.
Oil for delivery in December 2016 surged $20.09, or 17 percent, in the past four trading days since Goldman Sachs Group Inc., the world’s biggest securities firm by market value, forecast oil would average $141 in the second half of 2008 on constraints in production and a lack of substitutes. Crude for July 2008 climbed 4.4 percent in the same period, and today rose to a record $130.47.
(21 May 2008)
US calls on China to join global energy group, help stabilize oil markets
Associated Press via IHT
A U.S. official urged China on Tuesday to join the International Energy Agency – a group of major oil consumers that includes the United States and European governments – and aid its efforts to keep petroleum markets stable in times of crisis.
“China’s participation in the IEA’s collective emergency response system would make the system stronger,” Daniel S. Sullivan, an assistant U.S. secretary of state, said in a speech at a business conference.
China is the world’s second-largest oil consumer after the United States. Its surging demand for energy to fuel its booming economy has stirred unease abroad about the possible impact on global prices, as well as over China’s intentions as state-owned companies pursue access to supplies in Africa, Central Asia and elsewhere.
(20 May 2008)
Opec defends high prices in face of US legal action
Brian Ellsworth, Reuters via Arabian Business
Record-high crude prices have nothing to do with supply and demand but rather are caused by speculation and a weak dollar, Opec Secretary General Abdullah Al-Badri said on Tuesday.
World leaders have hounded Opec to pump more as prices hurtle towards $130 per barrel, but Al-Badri said the organisation would not act on production level until it was warranted by market fundamentals.
… The US House of Representatives passed legislation on Tuesday allowing the US to sue Opec members for working to set crude prices – though the White House has threatened to veto the measure.
“It’s their policy and I’m not going to challenge it, but I think this is not the way to handle any problem, problems should be solved with dialogue,” said Al-Badri.
(21 May 2008)
Oil: Up, Up, Up
Moira Herbst, Business Week
With a surprise drop in inventories, crude crosses $133 a barrel-and many see further gains
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… Crude has surged 95% in the past year. Amid all that buying, many analysts see few obstacles to $150 or $200 barrels. Peter Beutel, president of the energy risk management firm Cameron Hanover, noted May 21 that traders once put little weight on weekly stockpile reports. These days, with political instability, inflationary threats, and a weak U.S. dollar, almost any spot of news drives prices.
“We used to ignore [inventory] reports, but now they’re a matter of life and death,” Beutel says. “Now anything can move prices. I’m convinced that if my lawnmower leaked a few drops of oil it would generate buying.”
Imports Fall
Still, analysts are quick to note that few strong conclusions can be drawn from the inventory report.
(21 May 2008)
