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Oil demand should remain strong, oil getting higher July 13, 2011

Posted by mytruthaboutoil in Oil (general), Oil prices, Oil trading.
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Oil rose Tuesday after the Organization of Petroleum Exporting Countries said global demand will be the highest ever this year, although the “unsteady” global economy may slow demand more than previously thought.

Benchmark West Texas Intermediate crude for August delivery rose 45 cents to $95.58 per barrel in morning trading on the New York Mercantile Exchange. Brent crude, which is used to price many international oil varieties, fell 54 cents to $116.70 per barrel on the ICE Futures exchange in London.

Analysts and investors pay special attention to world demand forecasts. The expectation that China and other developing nations will keep using more crude has supported prices this year despite weak gasoline consumption in the U.S. and a festering credit crisis in Europe that has raised concerns about international demand for oil.

While OPEC thinks global demand will continue to increase this year to the highest levels ever, the monthly report it released Tuesday said that demand won’t grow as much as it previously expected. The cartel said daily world consumption will increase this year by 1.36 million barrels — down from a previous estimate of 1.38 million barrels — to an average 88.18 million barrels.

OPEC said it cut demand expectations “as the unsteady global economy has added risks to the forecast.” The report also said it’s hard to estimate how much oil the U.S. will consume this year. Gasoline consumption fell ahead of the summer driving season as retail prices approached a national average of $4 per gallon. A gallon of regular has since dropped by nearly 35 cents to a national average of $3.636 on Tuesday, according to AAA, Wright Express and Oil Price Information Service. It’s still 92.1 cents higher than the same time last year.

Meanwhile, the Labor Department said Tuesday that job openings were flat in May, suggesting that hiring may not pick up this summer. The U.S. trade deficit also jumped in May to the highest level since October 2008, primarily because of a surge in the price of oil imports at that time.

In Europe markets slumped on fears that Greece’s financial crisis would spread to Italy and Spain. The dollar continued to rise against other major currencies. Oil, which is priced in U.S. currency, tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money.

In other Nymex trading for August contracts, heating oil fell 2 cents to $3.0657 per gallon and gasoline futures lost 2 cents at $3.0515 per gallon. Natural gas gained 1 cents at $4.291 per 1,000 cubic feet.


OPEC decides to hold oil prices and production March 17, 2010

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Is $80-a-barrel oil the new $60?

The Organization of Petroleum Exporting Countries hopes so. The oil cartel met in Vienna on Wednesday and decided to leave well enough alone, making no changes in production quotas and praising the current world crude-oil price of about $80 as high enough to spur new exploration and production and low enough to avoid killing the global economy’s fragile recovery.

Last year, crude-oil prices averaged $61.95 a barrel. So far this year, however, the price of West Texas Intermediate-grade crude oil — a widely used industry benchmark — has averaged more than $77 a barrel, a more expensive start than in any year other than 2008, when prices began at more than $90 a barrel and later spiked to nearly $150.

Citing “persistently high” petroleum levels in the storage tanks of industrialized nations and an expected increase in oil output from non-OPEC countries this year, OPEC ministers said there is no need to boost production. At the same time, they said in a communique that there is no need to cut output, citing “serious threats” to the global economic recovery from “the mounting and potentially unsustainable public debt in the most advanced economies.”

“The OPEC countries are gleeful about what’s happening in the oil business, and they don’t want to do anything to change it,” said Edward Morse, an oil analyst at Credit Suisse.

“Oil prices are high and rising, so there’s really not much for them to do,” said Roger Diwan, a oil expert at PFC Energy, a Washington consulting firm. “They just need to watch and make sure that the economy doesn’t dip into recession. They’re sort of on automatic pilot.”

The day before the meeting, the oil minister from Saudi Arabia, the world’s biggest oil exporter and an OPEC linchpin, expressed satisfaction with the current market conditions.

“The price has stayed very well in the range of $70 to $80. It is in a very happy situation,” Ali al-Naimi said on the eve of the meeting, adding that he saw no need to change output. “There are no shortages, investment is going on, demand looking forward is going to continue to rise, so everyone is happy,” he said, according to Bloomberg News.

World oil prices are relatively high, given that U.S. motorists’ demand for fuel remains weak, virtually unchanged from last year; about one out of every eight barrels of oil produced worldwide goes into the tanks of American vehicles. The weak demand for diesel fuel, used largely by truckers, is a sign of continued U.S. economic weakness.

“Two weeks ago, it looked like we had passed last year’s horrible data, but now we’re back below that level again,” Morse said.

And prices at the pump are rising because crude oil prices have been high, and that is likely to restrain U.S. demand for gasoline. The Energy Information Administration reported Wednesday that for the fourth week in a row, the U.S. average price for regular gasoline increased. The average moved up about four cents, to $2.79 per gallon, 88 cents higher than it was last year at this time, the EIA said, noting that the cumulative increase during the past four weeks amounts to 18 cents per gallon.

China’s booming economy is one of the few sources of new demand for oil; another is in OPEC members’ economies, where fuel prices are heavily subsidized. But oil production capacity continues to edge up in many places, such as Iraq, Angola and offshore Nigeria. Abu Dhabi and Kuwait are also planning production projects.

Financial concerns are another key factor. Diwan said oil prices are relatively high because investors have been buying oil and other commodities because they expect the value of the U.S. dollar to decline. “There is a flight to hard assets,” he said.

Will the OPEC take over the world? May 26, 2009

Posted by mytruthaboutoil in Geostrategy, Oil (general), Oil giants, Oil prices.
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03_opecThe Organization of the Petroleum Exporting Countries (aka OPEC) is a cartel of oil producing countries, gathering 14 of the worlds most important oil exporting countries.

The aim of this powerful organization is to influence oil prices through oil production’s regulation. Therefore, any decision taken by OPEC has a decisive impact on oil market.

OPEC myth really started with the 1973 oil crisis. OPEC members, which were mostly arab countries, decided  to react after the Kipour war between Egypt and Israel and chose to dramatically raise oil prices and to set an embargo against Western countries which supported Israel. outrageous rise of oil price and now seems unable to limit its fall. That shows well enough that OPEC does not any more control oil market.

Oil prices quadrupled in five months, provoking a worldwide recession and generating the myth of an almighty organization able to destabilize Western economies for political purposes.



OPEC members' contribution

OPEC members' contribution






The end of a myth

However, times have changed and OPEC now faces many problems.

More and more oil is discovered everyday in various parts of the world, notably in countries which are not members of OPEC. Therefore, the cartel is struggling to efficiently control an increasingly globalized oil market.

Today, OPEC member countries produce only 40% of world oil production, eventhough they still sell 70% of the oil sold on the international market and gather almost 80% of the estimated oil reserves.

But OPEC appeared powerless to face  last years outrageous rise of oil price and now seems unable to limit oil prices’ fall. This proves well enough that OPEC is not anymore able to set oil prices and dictates its will to the world.