Oil Near Record, Saudi Hike Not Enough?

[NNN0LHI]

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5238816

NEW YORK (Reuters) - U.S. oil rose to within a few cents of a new 21-year record on Monday as traders and analysts doubted whether Saudi Arabia's weekend pledge to raise output unilaterally was enough to bring supply up enough to meet demand.

U.S. light crude futures (CLc1: Quote, Profile, Research) rose nearly $2.00 a barrel to trade as high as $41.80, just five cents short of its 21-year record reached last Monday. London Brent crude (LCOc1: Quote, Profile, Research) was up $1.60 higher at $38.11 a barrel. snip


"Saudis in last two weeks offered one proposal after another for increased quotas for OPEC and yet prices haven't fallen significantly and are up again this morning," said Nauman Barakat, senior vice president at Refco.

"Yesterday ... they suggested they would be willing to increase their own production to a level of 10.5 million barrels per day (bpd). These are signs of desperation."

more

[Ella]

1. Oil is saying

that Prince Bandar is full of it and can't deliver. Maybe because of increasing rate of incidents like these: http://english.aljazeera.net/NR/exeres/95950F6E-0A0B-4940-8F31-9690C50C9DF8.htm

>Saudi Arabian security officials have exchanged gunfire with fighters in the town of Buraida.

The Saudi royals are under siege. Does anyone remember the State Dept. telling Americans to get out of Saudi Arabia, that they expect major terrorist actions there. The oil commodity market is taking that warning seriously, IMO. There are few things more vulnerable to attack than a giant oil pipeline/refinery complex.

[NNN0LHI]

2. Thanks to the Chimps war in Iraq insurance for tankers has skyrocketed

The price of oil is going higher. Not lower as some think.

Don

[Alerter_]

12. the Saudi regime is in trouble

I do remember the State warnings to US citizens, just a few weeks ago? If the Saudi royals goes down, who takes power? Osama Bin Laden? It's not such an impossible scenario anymore.

[hadrons]

3. China will probably suck up any increase ....

plus with a weak dollar Europe could buy more

[phantom power]

10. this is going to be huge

the sleeping giant is finally starting to awaken. As usual, it's a big important story that isn't getting enough air-time in mainstream news outlets.

Although I did a story on the impact of China on construction resources, since it's impacting the housing industry.

[T Roosevelt]

4. Any increase by Saudi is a small percent of OPEC total

The Saudi's are bumping up against their historical high production, as is OPEC. They're talking about an increase of about 1 million barrels vs an OPEC total of close to 30 million barrels. This may have a slight impact on prices, but nothing close to what would be necessary to bring prices noticeably down. An increase of 3-4% production does not translate into a price reduction of 25% per barrel (~$30/barrel) that would be needed.

And with all other prices going up (the aforementioned insurance as an example), I think basically we are screwed. But hey, at least I don't drive a Hummer...

[4dsc]

6. Not to mention it takes how long to get here

The last I heard, it would take 4 to 6 months to get the oil here. Then of course there is decreased refinery capasity so what's the use??

[T Roosevelt]

11. Refinery capacity is a limiting factor

wouldn't really matter if there was more oil - if the refineries can't handle it...

[Don_G]

5. I Think Part Of It

Is tied to the weakness in the Dollar. I got this from the Stock Market thread: http://www.newratings.com/new2/beta/article_425655.html

[Guaranteed]

7. That and everybody owns an SUV- increased demand.

I think we should blame this all on SUV owners- tell em FUCK YOU!! YOU'RE MAKING ME PAY WELL OVER TWO BUCKS A GALLON YOU FUCK!!

[GumboYaYa]

8. Too bad, so sad....

fortunately, my bicycle still rides no matter how expensive oil gets. I will enjoy riding past all the SUVs on my way to work for free even more now.

[Snellius]

9. When even Saudi Arabia can't bring down the price of oil, ...

the world is in BIG trouble.

We're all going to wake up one morning soon and say "There's no more what?"