Tuesday January 06, 2009

NYMEX crude oil prices rebound above $50 on OPEC cuts, Russia gas dispute, Middle East conflict

bloomberg.com :

NYMEX crude oil prices rose above $50 a barrel to a five-week high as Kuwait and Qatar indicated they will implement OPEC production cuts announced last month [Dec 2008], and a dispute between Russia and Ukraine reduced natural gas shipments to Europe. Crude oil for Feb 2008 delivery rose as high as $50.47 on NYMEX, the highest since 1 Dec 2008. Oil also advanced as the conflict between Israel and Hamas reached its 11th day with battles in the Gaza Strip. Iran has called for a suspension of crude exports to allies of Israel. OPEC decided to cut production by 4.2 million barrels a day from Sep 2008 levels at a Dec. 17 meeting in response to tumbling prices. Kuwait will reduce shipments of oil sold under long-term contracts by 5% starting 22 Jan 2009. Qatar will slash cargoes by as much as 6% in Feb 2009.

- Here we go again on the crude oil roller coaster. This time round it took 3 major factors to bring up crude oil prices, including OPEC production cuts, a repeat of the Russia-Ukraine natural gas dispute (while awaiting a Gas OPEC), and, the more worrisome one, an escalating Middle East conflict that has every chance of spinning out of control.

Given these major factors, it's a wonder crude oil prices aren't back at $100 already. This speaks volumes about the depth of the ongoing global economic collapse and how weak demand is. We're now quite a bit of distance away from $32.40 oil, pulling away from that low point for now, but it will have to take a really big collapse on the supply side to move prices much further than this. And at the rate things are collapsing, we could count out a big jump on the demand side.

See also :

1. NYMEX crude oil drops below $50 on global economic slowdown
2. Peak Oil : IEA reports global depletion rate could go up to 9.1%, struggle to produce crude oil
3. Global credit crisis slows food and energy shipments, may lead to shortages
4. NYMEX crude oil falls more than $100 from Jul 2008 record on US recession, OPEC production cut delay
5. NYMEX crude oil recovers from $32.40 low after 2.2 mbpd OPEC production cut announced

(2009-01-06 23:22:21 SGT) [Energy] Permalink

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