A Call for Oil Price Stability

In less than a year, oil prices have gone down partly because of the ongoing global financial crisis. I first thought of the Iraq invasion in 2003 as the major cause of price increase of oil.

Early this year, I've witnessed first hand here in the Philippines how an oil-consuming country gets affected by the continuing rise of oil prices. People literally jammed our light-rail transit system. Those who would normally use their cars to commute to work suddenly found themselves among the throng of people lining up to get a cheap ride on the trains.

I read an article on the dailynews.com today urging cooperation among oil producers and consumers to help stabilize the price and future supply of oil. Will our world leaders finally "talk" about this pressing issue? You can read the whole article from this link:

http://www.newsdaily.com/stories/lj506554-us-london-energy-meeting

Crude continues decline despite signals from OPEC

Oil prices slumped Friday, despite signals from OPEC that it may slash production again, with the markets instead focused on the most recent reports showing drastic cutbacks in spending and consumption by businesses and consumers.

Gasoline prices again fell overnight, prompting one analyst to note a "half price holiday sale on gas" with Americans fueling up for the Thanksgiving holiday at half the price they did in July.

Light, sweet crude for December delivery fell $1.20 to settle at $57.04 a barrel on the New York Mercantile Exchange.

The Commerce Department Friday reported the largest ever October plunge for retail sales and a sharp drop in business inventories. It said retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.

The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.

That likely means fewer vehicle miles driven, both because of job losses and less trips to the shopping mall and less money spent on vacations. Businesses are slowing down as consumption drags.

The Commerce Department reported business inventories dropped by 0.2 percent in September. It was the first decline since March 2007 and the biggest drop in more than three years, since inventories fell by 0.3 percent in July 2005.

The national average price for regular gasoline fell overnight, down 2.6 cents to $2.152 a gallon, according to according to auto club AAA, the Oil Price Information Service and Wright Express. That is nearly $1 a gallon below what it was a month ago and nearly $2 below where it was in July when prices peaked at $4.11 per gallon.

"We're on a trajectory that cannot be turned around on the short term," Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service, said Friday of gasoline prices.

In his blog Thursday, Kloza estimated that the daily U.S. gasoline bill for the rest of November will be about $750 million per day less that what it was in early July when the cost was $1.55 billion per day.

He said some retailers have noted the actual purchase amounts of gasoline are smaller than what they were over the summer as motorists realize they will pay less for gas the next time they fill up.

He put the odds of oil dropping below $50 per barrel at about 50 percent even as the Organization of Petroleum Exporting Countries repeatedly removes oil from the market to keep pace with deteriorating demand.

An OPEC official said the 13-member states would meet in Cairo Nov. 29 on the sidelines of a previously planned meeting for Arab members of the group.

The official asked not to be named because the Vienna-based organization is not issuing a formal statement.

OPEC held an emergency meeting only three weeks ago and slashed production by 1.5 million barrels a day. Crude has tumbled 8 percent since then.

Analysts say OPEC's rhetoric rarely matches what it does.

Nevertheless, as the economy turns around, consumption of fuel will increase and send oil prices higher.

"In the long run global growth will be restored at some point," Kloza said Friday. "It will do their dirty work for them."

George Littell of Groppe, Long & Littell said OPEC's recent cuts will not be felt for a few more weeks. He noted that prices did not begin to fall this summer until Saudi Arabia ratcheted up production in July.

Littell said oil prices likely will start to rally in a few weeks once OPEC cuts start to hit and cold weather sets in across the country.

Jim Ritterbusch, president of energy consultants Ritterbusch and Associates, said OPEC needs to do something. If OPEC were to maintain production levels, oil consuming countries would be happy, but it probably would drag prices down another $5 or $10 a barrel, he said.

Oil prices have fallen about 60 percent during the last four months after reaching $147.27 in July.

OPEC, which produces about 40 percent of world supplies, has said it may cut production by the end of this month if prices continue to fall.

Before the 1.5 million barrel cut, OPEC said it was taking 520,000 barrels out of daily production. That too was brushed off by the market.

Meanwhile, the government said Friday that natural gas stockpile levels in the U.S. rose more than expected last week, but are 2 percent below the year-ago average.

The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states rose by 62 billion cubic feet to about 3.47 trillion cubic feet for the week ended Nov. 7.

Analysts had expected a boost of between 41 billion to 46 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The news sent natural gas for December delivery down less than a penny to settle at $6.312 per 1,000 cubic feet on the New York Mercantile Exchange on Friday.

In other Nymex trading, heating oil futures fell 4 cents to $1.8351 a gallon, while gasoline prices dropped 6 cents to $1.24 a gallon.

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Fuel Price Cut on September 2008

Some relief is on the way. Fuel prices will drop for a second consecutive month at midnight tonight. The Minerals and Energy Department made the announcement last Friday that the retail price of petrol will drop by between 69 and 78 cents per litre. The wholesale price of diesel with 0.05% sulphur content will drop by R1.44 per litre. Diesel with 0.005% sulphur content would drop by R1.46 per litre. This comes as a huge relief to consumers who had been battling with the increased fuel prices a couple of months ago.

The wholesale price of illuminating paraffin will drop by R1.46 a litre and the single maximum national retail price for illuminating paraffin by R1.94 a litre. This is also much welcome for consumers of paraffin who were not happy that the price of paraffin did not drop when the petrol and diesel prices last dropped.

It is now a matter of waiting to see if the fuel prices continue to drop. The drop has been attributed to the strengthening rand and the softening world oil prices. But with the hurricane season approaching it will be interesting to see how oil prices react. We may see oil prices rising due to decreased supply because of the hurricanes.

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Oil Prices Rise as Gustav Shuts Gulf Installations

World oil prices rose by less than one dollar in Asian trade today after the Hurricane Gustav forced the shutdown of almost all oil production in the Gulf of Mexico, said analysts.

New York's main contract, light sweet crude for delivery in October, rose 84 cents to USD 116.30 a barrel when trading closed Friday at the New York Mercantile Exchange.

Brent North Sea crude for October gained 72 cents to USD 114.77 from USD 114.05 in London on Friday.

About one quarter of the US oil production comes from the Gulf, one of the largest energy production hubs in the Americas, but the US officials said that more than 96% of Gulf oil production and 82% of the natural gas output had been stopped due to the storm.

Gustav was on target to plough into coastal Louisiana today, potentially as a Category 4 storm with sustained winds of 242 kilometres per hour and storm surges up to 4.8 metres above normal.

"It's all about Gustav," said Tony Nunan, of Mitsubishi Corp's international petroleum business in Tokyo.

He said that price gains had been limited because of underlying worries about a global economic slowdown and falling demand for oil.

World oil prices have sunk from record highs above USD 147 a barrel in early July after surging from USD 100 at the start of the year.

Today's rise of about one dollar was "not really that much", Nunan said, adding that trading would be thin because the US markets were shut for the Labour Day holiday.

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Oil prices soar to new heights as Arizona faces record gas prices

Oil prices jumped above a record $127 per barrel Friday as Goldman Sachs Group projected oil prices to hit $141 this summer and $150 to $200 per barrel over the next two years.

All that puts inflationary pressure on gasoline prices, which are also at record highs.

The national average gas price is $3.79 per gallon, according to AAA. Gasoline prices in Arizona also are hitting record highs, with Glendale at $3.56 per gallon, Flagstaff at $3.69 and Scottsdale at $3.60. The statewide average is $3.57 per gallon, according to AAA.

Oil prices were $126 per barrel Friday morning, Arizona time, after approaching $128 early in the day, according to Oil-Price.net.

Oil-Price.net projects crude will hit $164 a barrel over the next year.

Crude prices were also pushed up Friday after Saudi Arabia declined President Bush's request to increase oil outlays.


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Oil prices below $90 in Asian morning trade

SINGAPORE -- World oil prices fell below $90 in Asian trading on Friday amid deepening concerns that weakness in the US economy -- the world's biggest energy consumer -- could sharply dent demand, analysts said.

In morning trade, New York's main contract, light sweet crude for delivery in February, slid 51 cents to $89.62 a barrel.

The contract closed 71 cents lower at $90.13 a barrel in trading on the New York Mercantile Exchange Thursday.

Brent North Sea crude for March delivery fell 20 cents to $88.55 per barrel, after settling 75 cents lower at $88.75 per barrel on Thursday in London.

"The drop in demand is certain in the short term with the economic slowdown in the United States affecting sentiments worldwide. Everyone stops spending, and that will drive prices further down," said Tony Nunan, of Mitsubishi Corp's international petroleum business in Tokyo.

He said trading is volatile and in a "worst-case scenario" prices could fall as low as $69 a barrel.

"I can see prices dropping to the lower 80s or even the higher 70s as we move towards the end of the first quarter," he said.

Oil prices retreated as US stocks fell sharply Thursday, with investors reeling from further dismal housing data and news of a record loss at Wall Street investment and brokerage firm Merrill Lynch.

Some analysts are predicting a prolonged real-estate slump and credit crisis could push the world's largest economy into recession.

On Friday, US President George W. Bush was to propose a series of "short-term, temporary measures" to stimulate the US economy and see it past current troubles, the White House said.

"If the US falls into recession and China slows down we could be headed for one of the most significant corrections of this decade in oil," said Phil Flynn, an analyst at Alaron Trading.

Prices remain at high levels but have shed more than $10 since striking a record in New York of $100.09 per barrel in early January.

"At the moment it seems that economic concerns continue to outweigh all these factors that drove crude prices to just above $100," Sucden analyst Andrey Kryuchenkov said in London.

"All the aspects that underpinned crude prices in 2007 and at the start of this year are still here, with tight supplies, geopolitical fears on the supply side and the broad weakness in the greenback.

But he said that until global economic jitters ease there is likely to be less emphasis on supply fundamentals.

Nunan said oil prices will only start to bounce back from first-quarter lows during the US summer holiday driving season when demand for gasoline peaks.

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IEA Says Oil Prices Could Fall Further

PARIS — Crude oil prices could fall further from this month's record high of $100 per barrel because of weakness in the U.S. economy, the International Energy Agency said Wednesday.

Still, rising demand in China, tensions in Nigeria and the Middle East, and falling oil stocks remain "supportive factors" for prices, the Paris-based agency said in its monthly oil market report.

A "rapid retreat" in crude oil prices from the $100 mark earlier this month shows "how volatile markets remain and, in early 2008, there would appear to be some downside potential," the report said.

Light, sweet crude for February delivery fell $2.30 to settle at $91.90 a barrel on Tuesday _ down from the record high of $100.09 a barrel on Jan. 3. By midday Wednesday, the contract was down another $1.72 to $90.18 a barrel after sinking as low as $89.26 earlier. It was the first time since Dec. 19 the price of crude fell below $90.

World oil demand is expected to rise by 2.3 percent this year to 87.8 million barrels per day, the IEA said, which represents a slight cut from last month's prediction that demand would rise by 2.5 percent this year. The agency added that its forecast could change further if the economic slowdown in the U.S. _ a major oil consumer _ worsens. Weakening U.S. demand would only be "partially" offset by strong economic growth in China and the Middle East, the report said.

However, the IEA said its preliminary figures showed U.S. demand has not declined despite higher pump prices, and increased 0.1 percent in November compared with the same month a year earlier.

In China, a gasoline and diesel shortage suggests "that pent-up demand is significant," the IEA said, citing an "exponential increase" of energy use along with increased demand for cars, trucks, and planes, among other oil-consuming items in the booming Chinese economy.

Production from Iraq fell slightly to 2.3 million barrels per day in December, after hitting a 3 1/2-year high in the previous month, the IEA said. The agency said it was revising upward its estimate for Iraqi output in November to 2.4 million barrels per day, from 2.3 million.

The IEA said Iraq has signed an agreement with an affiliate of Russia's Gazprom to study the reactivation of 300,000 barrels per day of pipeline capacity from Kirkuk to Banias, Syria, that has been out of operation since before the U.S.-led war in Iraq began.

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