Oil prices climb as Saudi Arabia hints at OPEC cut in output

[TexasLawyer]

Oil prices climb as Saudi Arabia hints at OPEC cut

London, Nov 28: World crude prices rose after oil kingpin Saudi Arabia suggested that OPEC might need to cut output further at its next meeting in December, analysts said.

Traders also reacted to news yesterday that Iraq's main northern oil distribution centre was in flames after being struck by two mortar shells.

New York's main contract, light sweet crude for delivery in January, won 62 cents to USD 59.86 per barrel in pit trading. In London, Brent North Sea crude for January delivery gained eight cents to USD 60.11 per barrel in electronic trading.

"Prices have continued to move up... Finding support in comments by the Saudi Oil Minister over the weekend, warning that OPEC would cut production again at its December meeting, should the recent production cuts fail to balance the market," Barclays capital analyst Kevin Norrish said.

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http://www.zeenews.com/znnew/articles.asp?aid=338515&ssid=51&sid=BUS

[Bozita]

1. Good work, Dick Cheney! -- Maybe you did better with GWB library donations

Did you do any hunting on your visit there?

[Theduckno2]

2. First thing I thought of too!

I swear, there is nothing that Bushco can touch that doesn't turn to crap.

I just wonder if the Saudis might be using this as a opportunity to camouflage their decreasing supply capabilities.

It would also seem, by way of inflated oil prices, to fit in with the Bushco Iraq war rationalization that we can't let Iraq's valuable oil fall into the hands of terrorists.

Otherwise, Way to go Dick ... Cheney!

[mom cat]

16. Me too! Actually I suspected he was there to enlist the Saudi help

in supporting the Sunni factions in Iraq, but maybe he was multitasking.

[saigon68]

19. Cheney was there to cut production

That way his company will make MORE $$$$$$$$$$

[nashville_brook]

3. why did cheney negotiate this? how does this serve his interest...

i know it must serve him somehow.

[Sherman A1]

4. Well,

rising prices probably will help some of his buddies somewhere along the way and serve as a tax to the rest of us.

[Javaman]

6. That and he probably has a swiss bank account that someone is

making month deposits to in his name.

[dipsydoodle]

5. Read in conjunction with this post

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2631672

I don't see much point in blaming anyone in particular. The flaw is the nature of the petro dollar recycling system which goes back to the early seventies.

[Javaman]

7. Then read this...

http://www.trueblueliberal.com/2006/11/21/housing-bubble-smackdown/

[dipsydoodle]

9. Many issues interact

but I still believe that there were events which simply couldn't have occured without the USA's abilty to print fiat money propped up by petrodollars. Hance the significance of the probable outcomes of oil producing countries switching to the Euro for sales.

[NickB79]

18. Read this one too

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x73436

EIA Numbers Show Global Conventional Oil Production Hasn't Risen Since 2005

Despite record prices and the resulting incentive to increase production, oil production from conventional sources has been flat.

Hello, Peak Oil.

[GliderGuider]

8. As far as the Saudi announcement is concerned

There is a growing body of opinion that is convinced these announcements are intended to disguise a structural decline in their production. This analysis is given credence by the fact that the Saudis promised to increase production after Katrina and failed to do so, as well as their complaints in the spring that they couldn't get anyone to buy their oil when the price was $70...

The Mexican national oil company PEMEX has indicated that their largest oil field Cantarell (the second largest field in the world) is now declining by 14% per year, with hints that the decline is about to become even steeper than that. Overall Mexican production has fallen by 6% in the last 6 months.

The UK is reporting an 8% annual decline in their North Sea production. However, the wells drilled there up to the year 2000 are showing a much higher aggregate decline of 13% per year. In 1985 the UK was getting 2.5 million barrels per day out of 32 oil fields. After a production slump in the late 80's, in 1999 they were again producing 2.5 million barrels per day, but now out of 136 fields. Today they are producing just 1.5 million barrels per day out of 175 oil fields. Average North Sea field productivity has dropped from almost 80,000 barrels per day per field in 1985 to just over 8,000 barrels per day per field today. That's a drop of 90% in average field productivity in just twenty years.

In other words, we're seeing the first signs of Peak Oil at work. This is the result of geology, not politics. It enters the political realm only when suppliers try to cover up the situation, as the Saudis are trying to do.

[dipsydoodle]

10. It enters the political realm

when countries pursue policies to secure future supplies by keeping them in the ground.

[GliderGuider]

11. I don't think many are deliberately doing that.

Net Present Value considerations could argue that they have a case for pumping as fast as they possibly can today.

There will be many strategies pursued by the different players over the next 10 years. What none of those strategies can alter is the amount of recoverable oil left in the world, or the fact that half of it is now gone.

[dipsydoodle]

12. I didn't mean that the countries who own the oil

were deliberately keeping it in the ground. I meant that outside influences like the USA were forcing that to be the case.

[GliderGuider]

13. Can you point to an example?

Besides Iraq, I mean. I'm not aware of any other cases of a third party influencing an oil producer to keep the oil underground. I'd be much in favour if it if they did, so long as it doesn't involve trashing the country and its people like in Iraq. The slower we pull oil out of the ground, and the higher the price goes, the longer we will have to adjust the way we live our lives.

[dipsydoodle]

14. Iraq may well be the main current example

There were two conflicting theories on the background to the current war. Flood the market with oil thus breaking OPEC's grip on price and let the price of oil collapse versus keep the oil in the ground for future use and just acknowledge that the price would fly.

I believe the subject of the latter is believed by some to be the background, now, to Iran. No, I agree, you can't just influence a producer to keep it in the ground - you just invade them. I think the main issue is that the military need oil in reserve and with regard to that supply the price doesn't matter - you just print more and more US$s.

[Strelnikov_]

15. Yep. OPEC Is Not Cutting Production, Production Is Cutting OPEC

Remember a few years ago when, what, $40 was the target OPEC ceiling.

So where is the demand destruction keeping supply in balance with demand? We are not really seeing much here in the U.S., but anyone who follows the issue, as I know you do, has seen the articles about how the third world is suffering. In other words, we are pricing the third world out of the market.

When Chindia starts to use those Wal-Mart dollars to price the U.S. out of the market is when things get really interesting, in a train wreck sort of way.

[GliderGuider]

17. It always bites hardest around the margins.

As far as the third world goes, my biggest concern is a convergence of climate change, peak oil and global food shortages. We have out-consumed our global grain production in six of the last seven years, and we all know what's happened to the ocean fish stocks. Throw in accelerating desertification due to climate change and relentlessly rising oil prices, season with AIDS and it spells looming disaster for Africa. Couple that scenario with a rising proportion of unemployed young men and religious leaders waiting to take advantage of the situation, and you have a looming disaster for the whole world.

I gotta stop writing about this stuff. It's really depressing.

[BushSpeak]

23. GliderGuider - Do you have any links to these studies?

Hi GliderGuider,

I was doing a study on Peak Oil and then got side-tracked by the elections. So I'm about year behind on my stats.

Any links to the information you mentionned would be greatly appreciated, as the ostriches that guide us here in France still have their heads in the sand.

Thanks in advance,

[goforit]

20. Nothing like screwing the American consumer! Cheney got even last trip.

[NickB79]

21. We've screwed ourselves

After decades of pissing away a non-renewable resource that took hundreds of millions of years to form, we in the US are suddenly pissed that we're being "screwed" because most of our oil is gone and the few remaining nations with large deposits can't pump what they have left fast enough to satisfy our demands? Or the demands of the Chinese or Indians, who are only attempting to emulate us and our wasteful culture as a symbol of "progress"?

I fear GliderGuider will be proven correct, and that these "cutbacks" are actually a way to cover the fact that Ghawar and other large oilfields are finally going into decline.

[PurityOfEssence]

22. "Whether the rock hits the pitcher or the pitcher hits the rock..."

"It's going to be very bad for the pitcher."

Who called whom? What else is going on? Little has been said about the serious insurrection brewing in Saudi Arabia over the last few years.

Something's afoot; speculation is intriguing to listen to, but in perilous and duplicitous times like these, I'm impressed by and suspicious of anyone who claims to know the true dynamics.

There are so many social and governmental systems in that part of the world that are just hanging by default, luck, ignorance or sheer confusion that any number of destabilizations are rife. History teaches us that in times of widespread doddering regimes, corrections can't be far off.

[Javaman]

24. And the coldest months of winter are still ahead of us...

Once upon a time the price of gas went up in the summer due to the extra demand by people driving more. Well it appears that in our new bizarro world of george w. moron* the opposite is now true. gas goes down in summer and goes up in the winter months.

Naaaaaaaa, no one manipulated the prices prior to the elections. perish the thought.

check out my theory regarding all of this...

http://journals.democraticunderground.com/Javaman/75