Better Fill up today

[frawin]

Dec-08 Crude is trading at $67.95, up$1.20, Nov-08 Natural Gas is trading at $6.69, down $0.087. 

[DanCookson]

Frank,
Safe to think OPEC will at least cut 1 million a day?  If they get radical and cut like 2.5 million or so, what do you think that will do to the outer months as well as the current trend?  Will the consumption data balance out the supply data?

Sorry for all the questions, but I know you have the answers and I am curious!

Dan

[frawin]

Dan, below is  from Bloombergs morning report. I think the Hawks, Iran, Venzuela and Libya are pushing for 2 to 2.5 Million barrel/day cut and hoping to get a concenus on 1 million/day cut. The Saudi's are pushing for 500,000barrel/day cut, the Saudi's have always been the price moderates for several reasons, they get their Military Planes from the US, they have Billions invested in the US Stock Markets and Real Estate and the Saudi's fear Iran, and the other warring Arabs, and want to stay on the good side of the US for protection. My guess is they will agree on a 1 Million/day cut and add the announcement that they will watch closely and be prepared to cut more, that being said, remember that the OPEC Members are notorious cheaters when it comes to their quotas. A big factor is the World economies and where demand goes, can we and the rest of the world continue on the present demand decline curve, my guess is the quick and easy demand reductions have been taken. A big concern is the pullback in US Drilling and exploration at a time when we should be expanding and doing everything we can to reduce dependence on Foreign oil and Petroleum based energy. In regard to the price I think we will be in a range from a possible low of $50.00 to a high of $90.00 on crude oil, I don't think even the Saudis want the price below $50.00 and I don't think the Russians, Iran and others want to push the price above  $90.00 until the world economies improve, which may take 1 to 3 years.

Opec faces internal dissent over reduction of output

Bloomberg

Published: October 22, 2008, 23:56

Riyadh: Opec, founded five decades ago to unify oil producers, risks dividing members as the group plans to cut output and raise prices just as developed nations face their worst recession since 1983.

Iran's energy minister, Gulam Hossain Nozari, said yesterday Opec may slash output quotas by 2.5 million barrels a day, or 8.7 per cent, an amount about equal to what's pumped from Kuwait. The Algerian minister and Opec president, Chakib Khelil, said two days earlier the reduction may be only 1 million barrels.

The debate in the Organisation of Petroleum Exporting Countries pits Saudi Arabia, the group's biggest producer and a US ally, against Venezuela and Iran, two nations that oppose US foreign policy and advocate higher oil costs. Crude plunged 52 per cent to $70.89 (Dh260) Tuesday from its July 11 record of $147.27.

"The divisions arise in Opec because what countries need and want varies," said Gareth Lewis-Davies, an oil analyst at Dresdner Kleinwort Group Ltd. in London. "The Saudis are playing a long-term political game. Other countries have higher costs."

Below $50

Oil options trading shows the probability that crude will fall below $50 a barrel by June has more than doubled in 10 days, Deutsche Bank AG said in a recent report. There is a 9 per cent likelihood that June 2009 crude oil contracts will expire below $50, up from 4 per cent, Deutsche said.

The world's industrialised economies will expand next year at the slowest pace since 1982, the International Monetary Fund said. Growth will weaken to 0.5 per cent in 2009, from 1.5 per cent this year, sending US unemployment to its highest level in 16 years, the agency said.

Oil demand may fall for the first time in 15 years this year.

[frawin]

Dan, it is interesting to think back who our major foreign crude suppliers were 40 years ago, and to look at their positons now. In my early days at Phillips I was in the Tanker Chartering group and Iran was one of our main crude sources. We lifted cargoes almost daily from Iran, today they are a bitter enemy and do not like to sell crude to the US. With the fall of the Shah, the middle East lost it's stability and the Far Left Muslim, terrorists took over. The worst is yet to come to and from that entire region.

[frawin]

Dec-08 Crude settled at $67.84, up $1.09 on the day, Nov-08 Natural Gas Settled at $6.419, down $0.358 on the day. Opec meets Friday and it will be very interesting to see what they agree on, and even more interesting how they adhere to it. Natural Gas storage numbers came out today and there was a 70BCF build.

[frawin]

Dec-08 Crude is trading at $63.75, down $4.09, Nov-08 Natural Gas is trading at $6.295, down $0.124.   

[frawin]

OPEC Agrees to Cut for First Time in Two Years as Prices Slump

By Maher Chmaytelli and Margot Habiby

Oct. 24 (Bloomberg) -- The Organization of Petroleum Exporting Countries cut oil production targets for the first time in almost two years to stem a collapse in prices.

The 13 OPEC nations decided to lower supply by 1.5 million barrels a day from November, oil ministers said today at the end of a meeting at the group's Vienna's headquarters. The reduction will be from the existing quota for 11 members of 28.8 million barrels a day.

The cut was ``one quick decision,'' Saudi Arabian Oil Minister Ali al-Naimi said in an interview. Crude oil has tumbled 57 percent from a July 11 record of $147.27 a barrel as the financial market crisis spreads, job cuts increase and fuel consumption slows. Prices fell as much as 7.1 percent after the decision.

``OPEC has offered the market all the ammunition they had,'' said Robert Laughlin, senior broker at MF Global Ltd. in London. ``With the bearish economic outlook and manufacturing in freefall this accord is not good enough.''

The International Energy Agency said Oct. 10 that demand among industrialized nations will fall 2.2 percent this year, reducing overall world demand growth to 0.5 percent.

OPEC President and Algerian Oil Minister Chakib Khelil said at a news conference that the cut will be ``100 percent effective'' in stabilizing prices.

Saudi Arabia, the group's largest producer, will reduce its output target by 466,000 barrels a day. Iran, the second- biggest, will cut 199,000 barrels, OPEC said in a statement. Kuwait's share of the reduction will be 132,000 barrels and the United Arab Emirates's 134,000 barrels.

Another Cut

Another cut in December is ``possible,'' depending on how the oil market reacts, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said in an interview after the decision.

Oil for December delivery dropped as much as $4.79, or 7.1 percent, to $63.05 a barrel on the New York Mercantile Exchange and was at $64.58 a barrel at 10:26 a.m. London time.

At a meeting last month, OPEC urged greater compliance with existing quotas, saying that would reduce supply by about 500,000 barrels a day. OPEC members excluding Iraq and Indonesia last month pumped 390,000 barrels a day more than their combined quota of 28.8 million barrels a day, according to Bloomberg estimates.

The last time OPEC decided to slash official quotas was at a December 2006 meeting in Abuja, Nigeria. The 500,000 barrel-a- day cut took effect in February 2007, expanding an earlier reduction agreed in October. The cuts were reversed later in 2007 as oil rallied.
.

Last Updated: October 24, 2008 05:48 EDT


 

[frawin]

Dec-08 Crude settled at $64.15, down $3.69 on the day, Nov-08 Natural Gas Settled at $6.239, down $0.18 on the day.

[Catwoman]

Gas is 2.19/gal here...I topped off my tank, as full as it would go...I'm fully expecting it to go up tomorrow, what with the cut in production having been announced today.  I can't believe how much it's gone down.

[frawin]

Dec-08 Crude is trading at $62.25, down $1.90, Nov-08 Natural Gas is trading at $6.04, down $0.199.