Tuesday April 29, 2008

OPEC chief warns of $200 a barrel oil price as NYMEX crude oil hits $119.93 record

This article belongs to the NYMEX crude oil price records story arc.

peakoil.com -> business.timesonline.co.uk :

The president of OPEC, the cartel of oil-producing countries, has given warning that the price of crude could hit $200 a barrel, sparking fears that rising fuel costs will force more businesses into bankruptcy. Chakib Khelil, the Algerian Energy Minister and president of Opec, said that the falling value of the US dollar would continue to drive up oil prices as investors sought to store their wealth in other assets. The price of oil hit an all-time high of nearly $120 a barrel today [28 Apr 2008] after North Sea production was shut down yesterday because of a strike at the Grangemouth refinery in Scotland. In early trading the price of US light crude rose $1 to $119.93 amid concern about the impact of industrial action at Grangemouth.

- Now even OPEC is talking about $200 oil. However, and I have come to expect nothing less, the contrarian community is already way ahead, and the contrarians are already talking about $300 oil, $400 oil and beyond. The $200 target was last year's talk.

So, whatever happened to "demand destruction" because of the US recession? Nowhere to be seen. In fact, I just heard on Jim Puplava's Financial Sense Newshour that for every 1 barrel of reduced American demand, there are 14 barrels of increased demand from developing countries such as China, India, Brazil and so on.

The news media likes to speculate over exactly how many dollars ($20? $30? $50?) of the crude oil price are due to mysterious oil traders, speculators, "hot money" from investment funds, and such. This is just another form of denial. In a similar fashion, the same media had been crowing about how crude oil was "still below" the Apr 1980 inflation-adjusted figure of $103.76 per barrel and had to stop writing this phrase in once oil hit $103.95 and quickly went beyond. Perhaps it just might take $200 oil to convince people that it isn't really "hot money" at all, but Basic Economics 101, that this is what happens when demand is greater than supply.

See also :

1. Crude oil hits $119.90 record on Euro breakout above 1.60
2. OPEC: High and volatile prices may be new norm
3. OPEC : Peak oil is near
4. OPEC keeps output steady in face of $100 oil
5. Hyper-inflation : early warning signs

(2008-04-29 19:36:33 SGT) [Energy] Permalink

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