Oil situation in doldrums!!!!
December 5, 2006 4:31am CST
Oil is in doldrums with lots of forces creating problems for investors. There have been three sides to this story , like yesterday’s report of mine said that the US cold weather will create a lot of demand for heating oil , this will create shortfall in oil supplies. Apart from this, OPEC (the Organization for Petroleum Exporting Countries) has shown concerns that their oil supplies have increased tremendously and that they would like to cut supply, there is another reason to their possible oil cut, is that the Dollar weakness has eroded the value of crude revenues for OPEC’s members and this may also encourage some to vote for a cut their next meeting on December 14 in Nigeria. It is very likely that OPEC would cut oil supplies even more apart from the already 1.2 million a barrel a day cut. This supply cut may create some panic among investors, but there is also another side wherein oil inventories have actually risen 1.1 million barrels last week showing that OPEC’s calculation of supply exceeding the demand. I personally feel unlike yesterday that oil would remain in the margin of $62 to $65 a barrel even if the OPEC decides to cut inventory as there is sufficient supply and demand and OPEC members feel that this would be a good idea for them since it gives them a lease of air from the losses they are facing because of the dollar slide because the crude oil is traded with dollar and hence the problem.
5 Dec 06
Crude oil rose on speculation the Organization of Petroleum Exporting Countries will agree to cut output next week, after a plunging dollar reduced the value of oil in euros, yen and pounds. OPEC, which sells oil in dollars, is scheduled to meet Dec. 14 in Abuja, Nigeria. The U.S. currency has dropped 13% this year against the euro and 2.6% versus the yen. Saudi Arabian Oil Minister Ali Al-Naimi said Dec. 2 that oil stockpiles are too high, indicating OPEC should cut output. Oil fell in earlier trading on signs mild U.S. weather will cut fuel demand. A barrel of crude in New York is up 3.2 this year in dollar terms. The same barrel would have dropped 8.5% if priced in euros. OPEC sells oil in dollars but purchases goods that are priced in pounds, euros and yen, so their purchasing power is declining. Therefofe will see some "noise" in the following weeks, but the price is going to stay around the US$ 60 per barrel... It seems that's a price OPEC and buyers really seems confortable with. Just go on and take a look at Market Activities & Views (e-nvestments.blogspot.com) for further information.
6 Dec 06
Crude oil is always a major issue in and out every country. And for now OPEC has to decide whether to cut the output or not keeping in view the U.S currency market, the dollar which is declining day by day, without a question of raising. At this point, I feel that the price of the oil may increase to $62 to $63 a barrel in next few weeks. At such a point of time, where dollar is sliding, lets wait and watch what OPEC decides about the reduction in output.
5 Dec 06
Yes you are right , oil companies especially from the Arabian countries have been the major gainers ...... see all confusion has been created by the US in the first place , if it hadn't ventured too much into the Middle Eastern countries then we would have been better off, now since the dollar is dropping it is feared that oil will again go up ......