Crude Oil Rises

Our WorldWatch News survey reported that crude oil rose more than $3 a barrel after a U.S Energy Department report showed inventories unexpectedly declined. ...unexpectedly declined !!
To make things worse prices may increase further because the Federal Reserve is expected to announce a quarter-point interest rate reduction to bolster economic growth.

Crude oil for December delivery rose to $93.26 a barrel at 10:43 a.m. on the New York Mercantile Exchange after touching $93.67. Futures climbed to $93.80 on Oct. 29, the highest since trading began in 1983. Oil is up 58 percent from a year ago.

Brent crude oil for December settlement rose to $89.90 a barrel on the London-based ICE Futures Europe exchange. Brent reached $90.49 a barrel on Oct. 29, the highest since trading began in 1988.

The Organization of Petroleum Exporting Countries agreed last month to raise output by 500,000 barrels a day starting Nov. 1 to help ease prices that threaten economic growth. The move failed and prices have jumped 17 percent since the Sept. 11 announcement of the increase.

Oil-consuming countries must certainly apply pressure on OPEC to increase output, but in the short term we don't anticipate a production increase above 500,000 barrels a day...therefore real pressure must be applied to all factors that are causing this abnormal crude /dollar fluctuation records.
Not all is bad news for Europe a weak dollar also cushions European consumers somewhat against higher prices, but there are some Goverments and oil companies that simply ignore this weak dollar situation and continue to increase final consumer prices...so here in Portugal we continue to have one of the worlds most expensive consumer price for any type of energy...


Never ending saga

The never ending saga continues as we are daily informed of the world crude situation and as readers are aware this topic has a minute by minute news development so after easing early last week, oil prices resumed their march toward the $100 mark after data showed a sharp drop in U.S. crude stocks, the U.S. dollar plumbed new lows and tension mounted between Turkey and Kurds in northern Iraq.
So now we have all these major worries to ad to smaller events that arecontinuing to add a premium to oil prices..
Oil leapt to a record high for a third day on Monday (29-10-2007),passing $93 as Mexico's state-owned oil company Pemex briefly halted one-fifth of its production about 600,000 barrels per day (bpd) of oil output due to bad weather in the Gulf of Mexico and the U.S. dollar struck new lows.

U.S. crude, hit a high of $93.20 a barrel earlier today 5:22 a.m ...
A Pemex spokesman informed they should be able to resume output immediately once the cold weather passed in two days. Mexico's three main export terminals were shut on Sunday.

Going up...

To all that read this blog and are aware of the crude situation will notice that right now Friday 26-10-2007 Crude oil rose above $91,87 a barrel to a all new record in New York, on the other hand we also have the dollar sinking more and more...now it's not a question of when we'll hit $100 but how quickly and how longer can this go on...
New U.S. sanctions against Iran, warnings of a Turkish assault on Kurdish militants in Iraq and the falling dollar have pushed prices higher today.
The U.S. has had sanctions against Iran since 1979 and it's not like we are just hearing for the first time about Turkey's intention to rout the Kurdish rebels in northern Iraq,what the headlines do is keep these issues front and center for anyone trading in this market ... So the real issue is what?
Every excuss is used to inflate the crude price in the international markets and some goverments and oil companies are grabbing this moment to increase the final consumer price... this is happening at the moment here in Portugal were the two bigger companies have increased what is already one of the worlds most expensive consumer prices...WHO CARES IF THE CRUDE PRICE IS THIS HIGH...APPARENTLY NO ONE...

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WorldWatch 2

WorldWatch has received yet another warning in that the world has reached the point of maximum oil output and production levels will halve by 2030 — a situation that will eventually lead to war and disaster...

A German-based Energy Watch Group released a report Tuesday saying the world’s oil production peaked in 2006 and from now on will drop by around 3 percent a year. It says that by as early as 2030, the global availability of oil will be half of what it was at its peak.…
The report was commissioned by the German environmentalist Green Party who predicted that the world will come into a big economic crisis in the coming years.....!The report warns that coal, uranium, and other key fossil fuels are also in declining supply. It predicts the fall in fossil fuel production will bring with it the threat of war, humanitarian disaster, and general social unrest.

Is this report just another “scaremongering”, on who can we trust...

On the other hand we have oil and gas market analysis and forecasting at the Center for Global Energy Studies in London, saying that there are plenty of supplies and no looming crisis.

Perhaps and based on the present situation the real problem will be that oil could be left in the ground and we could move on to another fuel in the future, not because we’re running out of oil but because, economically speaking, it is not worth extracting the oil...however we all agree that oil prices could continue to rise, especially if there is further instability in the Middle East.

So we once more appeal to the powers that be, to bring forward alternative energy solutions...THE SOONER THE BETTER...


Carbon fiber

Well every bit of good news helps and this is no exception since crude oil has topped 42 percent to over $86 a barrel this year, with U.S. petrol prices reaching $3.23 a gallon and due to this situation Toyota Motor Corp., the world's second-biggest carmaker, and Mitsubishi Motors Corp. have started to use carbon fiber and aluminum in experimental vehicles as they develop lightweight cars with high fuel mileage to win sales.

The 1/X concept hybrid car, weighs 67 percent less than Toyota's Prius model due to the useof a carbon-fiber body, will be unveiled at this week's Tokyo Motor Show. Mitsubishi Motors Corp. plans to introduce its i-MiEV Sport, an electric concept car with an aluminum suspension and frame that weighs 120 kilograms less than if it were made with steel.

They are all trying to cut weight, with crude prices getting higher, the carmakers are trying to improve mileage with lighter materials or thinner pieces of metal. Japanese carmakers dominate fuel efficiency with hybrids. Toyota, Honda and Nissan make eight of the 10 vehicles with the best mileage.

Carbon fibesr, are also used in Boeing Co.'s 787 and Airbus SAS's A380 aircraft, is about four times stronger than the traditional material for airplane structures and weighs 40 percent less... Carmakers are also turning to aluminum, 33 percent lighter than steel. Mazda Motor Corp. will display a new rotary engine with aluminum substituted for steel in the side housings for the first time. The engine, to be introduced in the early 2010s, will be lighter and more powerful than the engine now used in the RX-8.

But for the time being there is a problem....Carbon fiber is a technology for the future and is a very expensive proposition, but it will take years of work before the carmakers can use it for mass production....



Congratulations to the South African Rugby team, the Springboks on their win over England last Saturday in France...
They are now world champions...they are also the first team to win the title for a second time...
So once more congratulations.
Rugby like other sports generates thousands of fans and money... the sport in South Africa is the most popular followed only by football and cricket.
I too have played this sport during the 18 years that i lived in Joburg in the Transvaal , actually i played a couple of times in Ellis Park and watched
rugby games between those great teams such as the Transvaal, Free State,Northen Cape and so on.



Turkish affair

Our office received the news that according to information Turkish legislators passed a measure yesterday that allows Prime Minister Recep Tayyip Erdogan to authorize one or more military assaults within a year. Erdogan is threatening to direct an attack against members of the Kurdistan Workers' Party, or PKK, saying U.S.-led forces failed to control about 3,500 militants sheltered in Iraq's north. Giving politicians permission to attack normally leads to an attack.

Iraq holds the world's third-biggest crude-oil reserves, after Saudi Arabia and Iran, according to BP Plc. Iraq's oil-rich northern region is controlled by a semi-autonomous Kurdish administration. Kirkuk, the center of the region, is about 100 miles (161 kilometers) from the Turkish border.

Recouping Losses have become a major priority for consumers , producers, investors...

Oil Rises Above $89

The breaking point has been reached... most European countries cannot continue their normall business with the dollar and Euro at their present rates...

The spiral of the oil prices is a daily happening, everyday the market news is worse, now crude oil rose above $89 a barrel in New York for the first time after the U.S. dollar declined to a record low against the euro, enhancing the appeal of commodities as an investment.

Can the U.S. economy show signs of rising if the Federal Reserve cut borrowing costs ? NO... not as long as concerns that Turkey will use military force against Kurdish rebels in northern Iraq, a step that the U.S. says may damage Iraqi security and disrupt oil supplies,
Crude oil for November delivery rose to $89.46 on the New York Mercantile Exchange. Futures reached $89.56, the highest price since trading began in 1983. Prices are up 55 percent from a year ago.

Brent crude oil for December settlement rose to $84.61 a barrel on the London-based ICE Futures Europe exchange.

This will meam that soon in Europe as in other continents the final consumer price will also reach new values sending already fragil economies further in the red zone...


WorldWatch 1

Since the time of Moses that the Middle East has been a sensitive region, conflicts, wars, religion... now all these tensions are to blame for inflating the price of crude... Talk of war in the world’s most unstable region can inflate a hefty “war premium” into each barrel of OPEC oil. In the Middle East, wars seem to break-out every few years, and a pause in the fighting are often just a timeout, in order to re-supply and prepare for the next round of fighting.
If one wants to point the “finger of blame” at the biggest culprit, not the only culprit, but the biggest, behind the historic rise in crude oil prices, it’s no other than Federal Reserve chief Ben “B-52” Bernanke, whose decision to bail-out Wall Street brokers and banks this past summer, by slashing short-term interest rates, set in motion another US dollar devaluation, and sent global oil prices and gold sharply higher.

The Fed is the guardian of the world’s top reserve currency, and has a responsibility to defend the purchasing power of the greenback, and keep global inflation in check. But when push comes to shove, the Fed is providing strong support for the crude oil and gold market.
Whenever the stock market has a bad day, reporters from the mainstream media try to find plausible explanation, for why the market turned south. This week, the surge in crude oil prices above $87 per barrel was widely blamed for the market’s sudden tremors...and now to add to the critical situation we have the Turkey/Iran affair.....




At the moment we have five Nations that can supply the rest of the world with the much needed and most wanted Crude...
Crude is used in so many applications that to mention them at this stage would require a post the size of a good novel...But everyday we face the situations were this same substance is placed
in danger .... affected by various world happenings , from the most dramatic to the ridiculous...

Now its the Turkey Iraq affair...this only proves that every Nation is after the same thing...

Oil Rises Over $87

Turkey-Iraq Tension

Everything imaginable is going wrong as far as the oil market is concerned..Once more we are facing a situation were another nation is using a excuss to invade Iraq...sure they may have a problem with the Kurdish militants, a two-decade war for independence from Turkey at the cost of almost 40,000 lives... .what they really want are the oil fields ...which has the world's third-largest oil reserves.. Crude oil rose above $85 a barrel for the first time in New York on concern Turkish forces may pursue Kurdish militants in Iraq, curbing shipments as refiners prepare for the peak-demand heating season.

Crude oil for November delivery rose , to $85.30 a barrel . on the New York Mercantile Exchange. Futures reached $85.48, the highest since the contract was introduced in 1983. This is the fifth straight daily increase. Prices are 46 percent higher than a year ago.

Brent crude oil for November settlement rose to $82.07 a barrel on the London-based ICE Futures Europe exchange. Brent reached $82.23, the highest since the contract was introduced in 1988.

Today's intraday high passed the previous all-time inflation-adjusted record reached in 1981 when Iran cut oil exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, according to the U.S. Energy Department, or $84.73 in today's dollars.

The other concern is once we get some winter weather, prices will really take off ...



Crude oil for November delivery was up to $84.02 a barrel in electronic trading on the New York Mercantile Exchange at 9:13 a.m. London time. It rose as high as $83.04 earlier today, within one cent of the intraday record of $84.05 set on Oct. 12.

BP, Europe's second-largest oil company by market value and Shell, the biggest, climbed the most today, so the only good news with these high crude prices are for the oil companies and producers that stand to gain more and more profits, while the consumers pay more and more for less...
This situation is critical and cannot go on for much longer, goverments and world population should join forces and come up with the alternative solution, a new energy source is URGENTLY needed.

The Turkey affair

The Turkey affair
The world crude situation faces another challange in that crude oil rose to a record $84.05 a barrel in New York last week Oct. 12/07 on concern Turkey may seek to quell Kurdish rebels by invading northern Iraq, a country with the world's third-largest oil reserves.
Turkish Prime Minister Tayyip Erdogan told reporters his country would pursue the Kurdistan Workers Party, regardless of diplomatic costs, according to an Agence France-Presse report. Northern Iraq holds some of the country's largest oil fields, including Kirkuk, the source of much of Iraq's exports.
Lets hope this situation will not have any possibility of affecting crude supply.
Crude oil for November delivery rose to close at $83.69 a barrel at 2:50 p.m. on the New York Mercantile Exchange, a record settlement. Earlier, the contract touched $84.05, the highest since futures began trading in 1983.
Brent crude oil for November closed at a record $80.55 a barrel on the London- based ICE Futures Europe exchange.
Turkey's government will present a bill to parliament today authorizing a possible incursion across the border within a year.. Turkey said this week it would launch a crackdown on the Kurdistan Workers Party, or PKK, after rebels killed 15 soldiers in southeastern Turkey.
Saudi Arabia has the world's largest reserves of crude, followed by Iran and Iraq.According to estimates Iraq produced 2.075 million barrels of crude oil a day in September.
So lets wait and see the outcome of this situation, all we can do is use less fuel and in this way force the petrol companies to lower their consumer prices.


Saudi Arabia

According to news reports from our risk management executive... top oil exporter Saudi Arabia has told customers in Asia and Europe it will keep its crude supplies steady for October from September levels, backing expectations that an OPEC meeting on Tuesday will maintain supply curbs.
State oil firm Saudi Aramco informed buyers in monthly notices it would continue to supply Asian lifters with around 10% below their full contractual volume, as it has since April.

It will also keep shipments steady to two European refiners, indicating the world's largest producer is keeping a lid on supply.

I think if they're holding it steady, it probably means they're holding production steady. It's a sign that what the market is expecting from OPEC -- no rise in output -- is going to happen, however Saudi sources signalled OPEC may need to consider an output boost of up to 1 million barrels per day...
More than half of Saudi Arabia's crude heads to Asia. In 2006, the kingdom shipped 51.6% of its crude exports to the region.


Lower Fuel Demand

Stocks fell for the first time in three days, led by miners and oil producers, on concern a slowing economy will reduce demand for energy and metals. And according to our in-house analyst Crude may end the year below $70 a barrel, compared with $81.66 at the end of the third quarter, .
The price of gasoline at the pump in the U.S. fell four cents in the past two weeks to an average $2.75 a gallon, per gallon...this is equivalent to 66 cents
per litre at the pump...compared to our 1,33 per litre at the pump here in Portugal...!

Not everyone forecasts that oil will move lower by the end of the year some analysts say there is a risk of a jump above $90!!!

My view is we're at a turning point for prices and margins,crude-oil inventories may also rise because of increased production by the Organization of Petroleum Exporting Countries. The group, which is responsible for about 40 percent of global output, agreed last month to increase output by 500,000 barrels a day starting Nov. 1.

OPEC pumped 30.3 million barrels a day in August, or more than 33 percent of world crude supplies.

So i predict that the next move will be south toward the low $70s and high $60s before the end of the year, primarily as more bad news comes from the U.S. economy....


High Jet fuel prices.

The reaction by major European airlines to the surge in jet fuel prices over the last month is to discuss how bio-fuels are increasingly being looked at by airlines, Car manufactures are also finally being forced to look for other energy sources, but in most cases the crude replacement and technology already exists what the producers are waiting is for the right time to announce that they have a alternative fuel source, now is the time for them to cash on the high fuel prices as car manufactures and petrol companies are all involved in the same business... profit making... .


Recent History 2

Gulf War I did nothing to Oil prices. Saudi Arabia at the behest of US kept pumping Oil as much as the world needed provided the US got rid of Saddam Hussein from the neighborhood. World heaved a sigh of relief as Gulf War I shooting ended. During and after the Gulf War I, prices remained stable at $15 to $19 a barrel. Since then, the US and the European demand have increased roughly at the rate of 6 to 8% a year. This has strained the supply situation. In addition from 1999 onwards China and India added on to the market demand as big importers. The latter with rapidly increasing economies put a strong pressure on demand side of the equation. Oil prices began to increase once again. By year 2000, the prices shot up to about $27 a barrel. Also superimposed are events, which impacted the supply and demand, and major events, which impacted the prices.
Crude price have been hostage to the world events. Also production cuts or restoration by OPEC gravely impact the market place.

Recent History

Prior to October 1973 the world oil suppliers had very little say in setting the Oil prices. It was the importers – big oil companies, which set the prices. Arab-Israel war of 1973 changed that. Oil became the weapon of political pressure. Producers became assertive and organized themselves into the cartel (OPEC). This group not only protected the producer’s interest but also manipulated prices during an economic or political trouble. Oil prices jumped from about $3 a barrel in 1973 to $12 a barrel in 1974. There upon OPEC which had been formed as a study and statistics organization in 1960 became a primary tool to set production quotas for the member countries, hence the prices. Oil prices reached $30 a barrel from 1978 to 1981.

Taking of the US Embassy and its diplomats as a hostage in Tehran , Iran and expelling of Shah of Iran provided the ammunition for this sudden jump in prices. This uncertainty and election of President Reagan resulted in a major economic recession from 1981 to 1983. The demand reduced and the oil producers relented. Individual OPEC members kept pumping Oil in competition to each other to maximize cash inflow to them hence crashed the prices. This was good news to the rest of the world. Oil prices again hit $13 a barrel in 1985. This was the same price as in 1974.

World Crude Supply And Demand

World Crude Supply And Demand

The world crude prices have made everyone involved in the oil business such as producers, the traders and the refiners very joyfull, for them its better than a huge bonus, in that they now have high Oil prices . The profits that they have made are billions of dollars in cash flow at the expense of helpless consumer in the last months.
Annual world demand for the Crude Oil today is about 82 to 84 million barrels a day. Of which OPEC produces about 38 million barrel a day. Most of the OPEC oil is in Middle East and a bit in Latin American countries. Remaining world demand is met by local production (US in Gulf Coast , Alaska etc.; Europe in North Sea; Russia in the Siberian & Central Asian Oil fields; Canada by the Alberta & Deep sea drilling in the east coast etc.). Smaller producers in Africa and Asia also do their best to fill up the demand. Quite a bit of production is internally consumed by the industrialized and semi industrialized world. Gap in demand and production is imported. US imports 45% of its Crude oil needs from Middle East , Venezuela , Nigeria , and Mexico . Europe and newly industrialized Asia (Including China and India ) import as much as 30 to 60% of its Oil needs. Japan is worst placed, where almost all of its Oil is imported. This supply shortage has given the Crude oil exporters an iron clad stranglehold over the world economies. A minor disruption in supply in Nigeria for example causes a jump in Oil prices in the world markets. Similarly as the bombs start falling anywhere in the Middle East for any reason, it ultimately translates into rising oil prices. Hence the world is a hostage to this situation with no relief in sight for a decade or two.


No Good News

After searching all available information and after spending almost all morning with our local news analyst we were able to determine that the black gold as we call the crude, fell today...the reason being that oil and gas producers in the Gulf of Mexico restored more output after a mild storm triggered evacuation and production cuts.

US crude for November delivery fell to $81.14 a barrel by earlier this morning to stand nearly $3 below the all-time high set by the October-month contract on Thursday. The local price for the Europe..London Brent crude shed 45 cents to $78.85 a barrel.

The good news is that in the US Gulf yesterday afternoon a tropical depression passed without causing damage, however due to this 595,000 barrels of daily crude oil production, remained shut...due to the weather some 62.7 per cent of the Gulf's oil production has been shut, the highest cut from the region since massive hurricanes in 2005 churned through the region.

All this affects the world crude situation as everything is linked...A string of bullish factors... including falling US crude stocks, worries about inclement weather destroying oil facilities, a half-point cut in key US interest rates and a weak dollar - pushed oil to a record high last week.



Dollar Falls to All-Time Low

This morning having a look at our daily news report and in special regarding the crude worl situation we were able to notice that to our surpprise the dollar fell to the lowest ever against the euro since the 13-nation currency's debut back in 1999.

The U.S. dollar fell to an all-time low and posted the biggest monthly drop against the euro in almost four years. The dollar may decline further this week.
The dollar fell to $1.4267 per euro in September, reaching the record low of $1.4278 on 28-09-2007. It was the biggest monthly decline since December 2003.

The report also mentioned the consumer Confidence Plunges to almost a two-year low. . this will have the effect that the dollar will continue to fall while on the other hand we have the price of crude on a daily upward movement, but as we all now the crude price is affected by anything ..by any happening around the world, so for the time being we will face these fluctuations...


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