OPEC wants oil to reach $70 a barrel

[Gunny]

Sun Apr 26, 11:21 am ET

ALGIERS (AFP) – OPEC wants to see oil prices rising to more than 70 dollars a barrel, the oil cartel's secretary general Abdalla El-Badri said Sunday.

"The price of 50 dollars is not enough to cover investment costs for the future," El-Badri told reporters in Algiers.

OPEC wants oil to reach $70 a barrel

Screw OPEC.

 

[Valerie]

Sun Apr 26, 11:21 am ET

ALGIERS (AFP) – OPEC wants to see oil prices rising to more than 70 dollars a barrel, the oil cartel's secretary general Abdalla El-Badri said Sunday.

"The price of 50 dollars is not enough to cover investment costs for the future," El-Badri told reporters in Algiers.

OPEC wants oil to reach $70 a barrel

Screw OPEC.

Isn't it crazy? Now they say the market will be happy with oil at $70-100 per barrel.

Some are saying oil is the new gold standard, but much less stable!

Venezuelan President Hugo Chavez courts Arab support for oil-backed currency proposal

THE ASSOCIATED PRESS

Wednesday, April 1st 2009, 6:59 AM

DOHA, Qatar — Venezuelan President Hugo Chavez tried Tuesday to court Arab support for another swipe at America as its economy stumbles: a proposal for a new, oil-backed currency to challenge the global prominence of the dollar.

The idea never reached the full agenda of a summit of leaders from South America and the Arab League — and has little hope of gaining any momentum among the U.S. allies in the Middle East. But it managed to reflect broader sentiments at the gathering: That Western financial leadership has been deeply eroded by the economic meltdown.

Chavez set the tone moments after arriving in Qatar, proposing a "petro-currency" that would have the backing of oil-rich nations such as Venezuela and its Arab partners in OPEC. Chavez has tried before, with little success, to undercut the dollar's role as the world's leading commercial currency.

The dollar, however, is facing real pressures elsewhere.

China has struck deals — most recently this week with Argentina — to conduct trade in currencies other than the dollar, and Beijing's central bank governor has proposed creating a new "reserve currency" comprising a basket of global currencies controlled by the International Monetary Fund.

Iran has proposed replacing the dollar with the euro or other currencies to set worldwide oil prices, and other nations are swapping some foreign currency reserves in favor of the euro.

"Venezuela supports ... efforts to find an alternative reserve currency," Chavez told the summit.
Chavez plans stops in both Iran and China — in addition to Japan — after the one-day gathering, which focused heavily on trade issues but also touched on Arab worries about rival Iran's growing influence in Latin America.

"The global economic crisis erupted outside our regions, but nevertheless effect our economies," said a statement by business envoys from the two regions, who called for a "new international financial system" that includes greater influence from outside the West.

OPEC members — including Venezuela and many Arab Leagues states — have been hit hard by falling oil prices, which dipped below $48 a barrel on Tuesday.
Chavez predicted oil prices to rise and called $80 a barrel a "fair" level, according to a government statement. On Monday, Qatar's oil minister, Abdullah bin Hamad al-Attiyah, said his nation was "OK" with crude oil at $50 a barrel this year.

Brazilian President Luiz Inacio Lula da Silva told the gathering that the economic crisis is having "deep repercussions" on all economies, but it offers an opportunity "to correct the financial system and restore balance to global trade."

Venezuelan President Hugo Chavez courts Arab support for oil-backed currency proposal

 

[Toro]

Of course, OPEC is being self-serving. But it is unsure how much influence these guys have over the price of oil now anyways.

Its also true that that the marginal cost of production of new fields is about $60-$70, maybe a little lower. That's what it roughly costs to lift oil out of the tar sands in Canada and ensure an adequate return on capital. So oil is likely to fluctuate between $40 and $80 over the foreseeable future, with the trend moving up over time.

BTW, Chavez has little influence over OPEC. He's been starving the Venezuelan oil company PdVSA maintenance capital. Plus, he's driven out foreign companies with technical expertise to refine the heavy crude in which Venezuela is awash. Because of this, oil production in Venezueal has fallen. So don't take what he says too seriously.

 

[RodISHI]

Bloomberg April 26, 2009
Tokyo: The drop in oil prices is reducing income in the Middle East and threatening the economic stability of producing countries, Qatar’s oil minister said on Sunday.

"For the first time in a quarter century, world demand for oil is falling; the price has collapsed since July 2008," Abdulla Bin Hamad Al Attiyah said at the Asia Ministerial Energy Roundtable in Tokyo.

"Companies almost everywhere are freezing investment and re-evaluating energy projects based on high prices," he said.

April 22, 2009, Oil Market Sees Fluctuations In Price of Crude
While yesterday's dramatic fall in the oil price saw a barrel of WTI crude fall by almost 8% to around $45 a barrel, the oil market opened gapped up this morning marginally below the psychologcial $50 per barrel level.

The volatility of crude oil price, which has now entered the oil market is due to a combination of factors and includes a markedly stronger US dollar, as well as a sharp decline in the Dow Jones, with investors once again worrying about the state of the banking sector.

From an article on April 20, 2009

Trader and analyst Stephen Schork suggested there was little reason for even small upward price movements, considering the sorry state of the world’s economy. The government reported this week that the U.S. petroleum appetite is the lowest in a decade and oil inventories are now bloated with the biggest surplus in nearly 19 years.

Quatar's foriegn minister speech on March 28, 2009 at the leaque of Arab nations

Excellencies,
H.E. the Arab League Secretary General,
Peace Be Upon You and God's Blessings,
I have great pleasure to welcome you to your second homeland and express our happiness at your presence with us in Doha.
First, I would like to extend my thanks to Mr. Waleed Almualim, the Syrian Minister of Foreign Affairs, who has made commendable efforts during his country's presidency of the 2Oth Summit.
I would also like to thank Mr. Amro Mousa, the Arab League Secretary General, Assistant Secretaries General and all personnel of the Arab League General Secretariat for their efforts.
Our meeting is being convened under extremely important conditions which require that we exert considerable efforts to support joint Arab action and that we should be frank and open. The conditions through which the Arab nation is passing through call upon us to undertake responsibility to act with a view to uniting our ranks and objectives. The challenges are huge and the risks are numerous, while Arab peoples wait for us to match our statements with deeds.
At the consultations session held last evening, we studied with frankness and transparency the views and ideas related to what should be done on the issues that concern the Arab nation in the present and foreseeable future.

Excellencies,
Esteemed Audience,
Our agenda is full of issues of special importance, which are cause of considerable concern for all of us. The Palestinian issue, the situation in Sudan, the position of the International Criminal Court, the situation in Iraq and Somalia as well as other issues are not of less importance than the above ones and they prompt us to find positive results leading to suitable solutions despite their difficulty and complexity.
The atrocious crime perpetrated by Israel in the Gaza Strip was aimed at breaking the Palestinian people's will, undermining their resistance and weakening their determination. However, this objective has been thwarted. The Palestinian steadfastness has continued thanks to their gallant resistance despite the Israeli military machine, as well as pains, suffering, siege and strangling of Palestinians. Hence, we are all called upon to stand by the Palestinian people and provide all kinds of support to them to enable them to realize their objectives to set up their independent state on their national territory with Alquds as its capital. From this platform we appeal to the Palestinian leaders to accelerate their efforts to achieve reconciliation and unite the Palestinians.

Excellencies,
Esteemed Audience,
With regard to the International Criminal Court, we all believe that peace and justice are inseparable objectives for resolving any conflict in Darfur and elsewhere. We believe that justice cannot be attained without realizing peace. It is unfortunate and cause for raising legitimate questions that the recent step by the International Criminal Court to call to justice H.H. Presidnet Omar Hassan Ahmed Albasheer, were taken at a time of escalation of the efforts made by the State of Qatar, within the Arab-African Ministerial Committee and in coordination with the UN-AU Mediator, to push forward the political process in Darfur. There was a lot of optimism following the signing in Doha by the Government of the Sudanese National Unity and the Justice and Equality Movement of an agreement of goodwill and trust building. In addition, five other armed factions have signed a convention in Tripoli in which they pledged to get involved in the peace process and join the Darfur peace talks in Doha through a single negotiating delegation and a unified negotiating position. We will carry on our joint efforts supported by the international community to reach a settlement of the conflict in Darfur and prepare suitable conditions for peace.
As for the Iraqi issue, we welcome the efforts by the Iraqi government to restore stability and security throughout Iraq and achieve national reconciliation. We support all initiatives and efforts to consolidate Iraq's unity, entity and territorial integrity. We also welcome the agreement reached in Somalia, election of Sheikh Shareef and formation of the Somali government as positive steps towards peace. We call upon all Somali factions to give priority to national interests and act for Somalia's unity and stability.
In conclusion, I pray to Almighty God to guide us to success, to the good of our nation and to support us to attain our objectives.

Page with all the links for speeches from March 2006 to March 2009

 

[Valerie]

Of course, OPEC is being self-serving. But it is unsure how much influence these guys have over the price of oil now anyways.

Its also true that that the marginal cost of production of new fields is about $60-$70, maybe a little lower. That's what it roughly costs to lift oil out of the tar sands in Canada and ensure an adequate return on capital. So oil is likely to fluctuate between $40 and $80 over the foreseeable future, with the trend moving up over time.

BTW, Chavez has little influence over OPEC. He's been starving the Venezuelan oil company PdVSA maintenance capital. Plus, he's driven out foreign companies with technical expertise to refine the heavy crude in which Venezuela is awash. Because of this, oil production has fallen. So don't take what he says too seriously.

Looks like Chavez is just posturing and isn't taken very seriously by many.

OPEC, Asia Ministers Call for Oil-Market Oversight
April 26 (Bloomberg) -- OPEC and 13 Asian countries urged greater oversight of oil and other commodity markets to prevent a surge in prices after the global economy recovers from the worst recession since World War II.

Participants in a ministerial energy roundtable in Tokyo sought limits on positions in over-the-counter trades and said “excessive” oil-price movements are “undesirable,” according to a statement released after today’s meeting. They also called for “continuous” investments to boost energy supplies.

Asia’s biggest oil users met the world’s largest producers to discuss ways to revive spending and ensure stability in energy prices and supplies after the recession ends. Last year, the U.S. Commodity Futures Trading Commission initiated an investigation to determine whether crude prices reached record levels because of manipulation.

“Greater oversight of over-the-counter trading is challenging,” Ken Hasegawa, a Tokyo-based commodity derivatives sales manager at Newedge, said after the one-day meeting. “I doubt each government of OPEC and Asian countries is able to look into every oil and commodities contract done by banks, traders and speculators, including sovereign wealth funds.”

The Organization of Petroleum Exporting Countries unveiled a plan in January seeking regulations to cap speculative trading by investors who buy oil without planning to use it. Oil futures in New York have gained 16 percent this year and are still 65 percent below the record $147.27 a barrel reached in July 2008.

OPEC, Asia Ministers Call for Oil-Market Oversight (Update2) - Bloomberg.com

I do think it's headed to $80 though.

OPEC, Asia, call for curbs on oil speculation

By TAREK EL-TABLAWY – 2 hours ago

CAIRO (AP) — OPEC and Asian energy officials called Sunday for new oil investments and tougher measures to combat speculation in crude markets that some have argued helped fuel last year's oil price spike.

The call came during a one-day energy meeting in Tokyo to discuss volatility in the world oil market. Officials are concerned about another price spike once the world emerges from the global recession. The slowdown has sharply eroded oil demand and driven crude prices down about 65 percent from mid-July levels of $147 per barrel.

The drop in prices, while helping offset some of the pain from the financial meltdown, has undercut investments in the sector. That has led to the delay or cancellation of dozens of projects worldwide and sparked concerns of another oil price spike once demand rebounds.

"Adequate and continuous investment throughout the energy value chain is essential as a means to balancing supply and demand in the future," a statement issued at the end of the meeting said, according to Japan's Kyodo news agency.

The meeting brought together ministers from the 12 Organization of the Petroleum Exporting Countries and many of Asia's biggest oil consumers such as China, India and Japan.

Even as officials warned about the dangers of falling investments, they also voiced worry about speculation in the market. Many in OPEC, including Saudi Arabia, had blamed last year's run-up in prices to almost $150 per barrel on speculators and hedge funds.

"In order to achieve a stable oil market, the influence of excessive speculative activities in the oil exchanges, which lead to price volatility, should be limited through more regulation and control," Hossein Noqrekar-Shirazi, Iran's deputy oil minister for international affairs was quoted as saying by Iran's Press TV.

Saudi Oil Minister Ali al-Naimi urged his colleagues to confront what he said was unfounded fears about supplies, adding that such perceptions had "largely contributed to skyrocketing prices, in the past," the official Saudi Press Agency reported.

The statement issued by the officials said that volatility in the market is harmful to both producers and consumers and that "financial markets have an impact on oil price formation," according to Kyodo. It said officials, tackling the issue of supervision of over-the-counter markets and transparency, called for "further harmonized actions such as introduction of position limits."

OPEC, along with the International Energy Agency, has repeatedly warned about the dangers of falling investment in the oil sector. While many projects have been scaled back or delayed, many of its most influential members have said they are pressing ahead with oil investments despite the downturn.

Saudi's al-Naimi said his country is going ahead with its commitment to raise "its production capacity to 12.5 million barrels per day by the middle of this year," SPA reported. He added that this would help provide excess supply capacity that would cushion the market.

In March, Saudi Aramco, the oil giant run by OPEC powerhouse Saudi Arabia, said it was planning to spend about $60 billion through 2014 on energy projects.

The state-run Kuwait Petroleum Corporation said Saturday it had earmarked about $80 billion on expanding production and refinery capacity by 2020.

On Sunday, Kuwaiti Oil Minister Sheik Ahmed Al Abdullah Al Sabah told the meeting the OPEC member will press ahead with planned oil investment projects with an eye to achieve its production target of 4 million barrels a day by 2020. He said Kuwait was teaming up with Asia's top refiner Sinopec Corp. to build a 300,000 barrels a day refinery in China. It was also carrying out a joint venture with Japanese firms and Petrovietnam to build a 200,000 barrel a day facility in Vietnam.

The minister said the "current economic and price environment, coupled with the uncertainty about climate change policies and the future demand outlook, pose serious challenges to our plans and investments," the official Kuwait News Agency reported.

Kuwait, however, has been among those that has scaled back on projects — first by scrapping a joint deal with Dow Chemicals and then by postponing the country's already much-delayed fourth refinery.

OPEC, which produces about 35 percent of the world's oil, has been struggling to engineer a rebound in prices.

The producer bloc held off from enacting new production cuts during their meeting last month, opting instead to focus on compliance with an earlier round of cuts totaling 4.2 million barrels per day from September levels.

But the best it has been able to achieve is preventing an even deeper slide in crude prices, that have hovered between $40 to $50 per barrel most of this year.

Associated Press Writer Diana Elias contributed from Kuwait.

Copyright © 2009 The Associated Press. All rights reserved.


The Associated Press: OPEC, Asia, call for curbs on oil speculation

 

[Annie]

They've been trying since fall to get the price up, no luck, demand is down.

 

[Valerie]

They've been trying since fall to get the price up, no luck, demand is down.

Yes, demand is currently down and some are trying to manipulate further by saying all the measures to decrease volatility are causing such a decrease in revenue thus causing them to not want to invest in more drilling productions.

U.S. Legislation

The U.S. House Agriculture Committee in February approved legislation that would place limits on positions a trader can hold in commodity markets as the government seeks more control over derivatives. At present, such limits on speculative positions exist only for agricultural products. The bill would also enhance the U.S. Commodity Futures Trading Commission’s oversight of credit-default swaps.

At a meeting in London this month, policy makers from the Group of 20 industrial and emerging economies called for stricter limits on hedge funds, executive pay, credit-rating firms and risk-taking by banks.

Qatari Oil Minister Abdullah bin Hamad al-Attiyah and Japanese Trade Minister Toshihiro Nikai co-chaired today’s roundtable, and delegates included Saudi Arabian Oil Minister Ali al-Naimi and International Energy Agency head Nobuo Tanaka.

“We are not yet certain how we will create and control” limits on trading positions,” al-Attiyah said at a press conference in Tokyo. OPEC and Asian governments would need to watch what measures are adopted by the G-20, he said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ax.WSljkhssw&refer=home

‘Join Forces’

“We will take actions to avoid any excessive volatility in commodity futures, and Japan will look into what measures are appropriate,” Nikai said at the briefing. He said oil producing and consuming countries must “join forces” to tackle “supply issues” that may emerge after the world economy recovers.

Paris-based IEA said yesterday falling investments in production may result in a global oil shortage by 2013.

“Investments have dropped, and if this continues, an oil crunch would emerge,” Tanaka, IEA’s executive director, said in an interview in Tokyo. “I can’t rule out the possibility of an oil supply constraint in 2013 and 2014.”

Ministers at the roundtable said oil-producing and consuming countries must stem a decline in exploration and output.

“The drying up of liquidity to fund projects underpinning economic growth in emerging and developing economies has been a significant consequence of the recession,” Saudi Arabia’s al- Naimi said in the text of a speech at today’s meeting.

‘Great Concern’

OPEC members have delayed 35 drilling projects, the Wall Street Journal reported on Feb. 10, citing the group’s Secretary General Abdalla Salem el-Badri. Saudi Arabia and Kuwait have called off or deferred ventures to find new fields, expand existing wells, and build refineries, according to Japan’s trade ministry.

Falling investment “is of great concern, notably for energy-sector projects adversely affected by oil price volatility and lower demand for oil, when long-range commitments of adequate and timely investment flows are needed to ensure future supply,” al-Naimi said.

OPEC, supplier of about 40 percent of the world’s crude, faces a 51 percent plunge in net oil revenue this year, according to the U.S. Energy Department, which estimates the group will earn $476 billion. Spending on new energy production is likely to decline around 20 percent this year, according to the IEA, the Paris-based adviser to 28 nations.

Ask yourself percent of WHAT and compared to WHAT?