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| Jan 11, 2008 |  |
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Oil prices rise above S$134 a barrel on expectation of US Fed cut
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| SINGAPORE - OIL prices rose on Friday as a promise by the US Federal Reserve Chairman Ben Bernanke to act aggressively to counter economic woes boosted expectations the Fed may cut interest rates.
An attack on six oil industry ships by Nigerian rebels also supported prices. Federal Reserve Chairman Ben Bernanke's comments that the central bank is ready to cut interest rates to help stave off a recession raised chances the Fed will cut rates by a half percentage point when it meets at the end of January. 'The speech by Bernanke yesterday has been a soothing tonic and the market is now reacting to the fact that the broadly expected US slowdown may not turn out to be as serious,' said Mr Victor Shum, an energy analyst with Purvin & Gertz in Singapore. 'The threats to oil demand growth slowdown may be limited.' Lower rates tend to weaken the dollar, giving investors further reason to buy oil. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling. Light, sweet crude for February delivery added 64 cents to US$94.35 (S$134) a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract fell US$1.96 to settle at US$93.71 a barrel on Thursday after several big retail chains said holiday sales in the United States were weaker than expected, raising new worries about consumer spending. The looming possibility of a US economic slowdown that would crimp demand for oil overshadowed the attack on six oil industry ships by Nigerian rebels. 'I would have anticipated we might have seen more oil price reaction to that sort of development (in Nigeria),' said Mr David Moore, commodity strategist with the Commonwealth Bank of Australia in Sydney. Mr Shum said the market showed little reaction to the attacks in Nigeria because 'the concerns about the state of the US economy are serious and widespread and far outweigh the geopolitical tensions'. -- AP |
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| Jan 9, 2008 | |
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Oil prices higher in Asia
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| SINGAPORE - WORLD oil prices continued higher in Asia on Wednesday, as traders bet on further crude inventory falls in the United States, the world's biggest energy consumer.
Prices rose but remained well off historic highs reached last week when they touched US$100 (S$143.09) a barrel for the first time. In afternoon trade, New York's main contract, light sweet crude for delivery in February, gained 36 cents to US$96.69 a barrel. The contract had jumped US$1.24 to settle at US$96.33 a barrel in New York on Tuesday. London's Brent North Sea crude for February was up 25 cents at US$95.79 a barrel. The US Department of Energy (DoE) was due later on Wednesday to publish its weekly snapshot of American energy stockpiles for the week ended Jan 4. Analysts' consensus forecast was for crude reserves to fall by 1.25 million barrels to mark the eighth consecutive week of declines. 'Oil prices will not increase drastically today as compared to yesterday...,' said Mr Steve Rowles, an analyst with CFC Seymour securities in Hong Kong. Mr John Kilduff of MF Global said that in the first couple of days of the year 'it appeared speculative (buyers) were pouring back into the market after cashing out at year end.' But prices dropped sharply on Monday despite the Pentagon's reporting a weekend encounter between the US Navy and Iranian vessels in the strategic Strait of Hormuz. Mr Rowles said oil prices could rebound to US$100 'if oil supply is threatened", as seen with the Strait of Hormuz situation, but a rebound is unlikely to happen soon if market forces alone are considered. He added: 'I foresee the price of oil dropping off a little bit this week. Global recession seems to be theme of the year, but demand remains strong.' Traders said prices also declined as some speculators engaged in a bout of profit-taking amid lingering fears that slower US economic growth could dent global energy demand. Prices had briefly pushed higher after the Pentagon said three US warships had been harassed on Sunday by five Iranian speedboats. Iran's government played down the incident. Dealers predict cautious trade ahead of the next meeting of the Organisation of the Petroleum Exporting Countries on Feb 1 in Vienna. -- AFP |
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| Jan 8, 2008 | |
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Oil prices rebound in Asian trade
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| SINGAPORE - OIL prices were higher in early Asian trade on Tuesday after overnight falls in New York trade on concerns over the US economy, dealers said.
In early trading, New York's main contract, light sweet crude for February delivery gained 43 cents to US$95.52 (S$136.92) a barrel from US$95.09 in late US trades Monday. Prices had briefly risen in US trading hours after the Pentagon said three US warships had been briefly harassed on Sunday by Iranian speedboats in the Strait of Hormuz, a crucial gateway for global energy supplies. The Strait of Hormuz is a vital outlet for world energy supplies because crude exports from oil-rich Gulf Arab countries pass through the strait - or about 20 to 25 per cent of the world's crude. 'We did see a brief bounce when the Iranian news came out,' said Sucden trader Mr Rob Montefusco. 'They were looking to bash through US$100 again but there wasn't any follow-through buying,' he said. Oil prices struck a record high of US$100.09 in intraday trade last Thursday on a combination of declining inventories, a weak dollar, soaring energy demand from Asia and geopolitical risks. -- AFP |
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7 2008: 6:06 AM ESTEmail | Print Type Size 
NEW YORK (Fortune) -- Crude's surge last week took its price to an eye-popping $100 a barrel. The rise comes on top of a 57 percent jump for 2007 and puts oil within reach of its all-time inflation-adjusted high above $102, hit back in 1980.
The latest jump means that Americans can expect to pay more for everything from gasoline to food and clothes. Those rising prices threaten to constrict consumer spending, which is repsonsible for more than two-thirds of domestic economic activity.
A sharp consumer slowdown would be bad news indeed, because the economy is already showing signs of strain. The government reported Friday that only 18,000 jobs were created last month, a mere fraction of the number needed to keep up with population growth. The Institute for Supply Management's factory index dropped below 50 in December, a sign manufacturing work is contracting.
So will $100-a-barrel oil be the straw that breaks the economy's back? Probably not.
After all, growth has persistently chugged along now for four years despite ever-increasing oil prices. Obviously, another huge rise in oil prices this year wouldn't help the economy - but it's not at all apparent that it would break it either. "We must accept the notion that at some point there's a price people won't pay" for oil, says Howard Simons, an oil industry veteran who has been measuring oil's impact on the economy for 30 years. But crude oil has seen its price rise fivefold in just six years, he adds, and "we haven't even approached the point of crimping consumer spending."
Simons notes that unemployment, at 5 percent, remains historically low, and that consumer spending hasn't fallen off a cliff even as foreclosures spike and house prices plunge. Moreover, history shows that trying to predict a recession is daunting.
Simons notes that just four years ago, a spike in oil prices took the price tag on a barrel of crude oil to $40 - a level many observers viewed as unsustainable. Voices predicting imminent recession grew louder as crude surged past $50, $60 and $70 a barrel. Yet as weak as parts of the economy now look - house prices are in free fall in much of the country and wage growth has been anemic - a sharp pullback in economic activity has yet to manifest itself.
Indeed, despite Friday's weak labor report, "These jobs gains indicate the economy did not enter a recession in the fourth quarter of 2008," writes Peter Morici, an economist at the University of Maryland's Robert H. Smith School of Business.
The economy's resilience is due in part to gains in energy efficiency over the past quarter-century, since the last oil shock. Ken Medlock, a fellow in energy studies at the Baker Institute for Public Policy at Rice University in Houston, also notes an energy-saving shift from a manufacturing-led economy in the 1970s and 1980s to today's service-oriented economy. He says that the price of crude oil would need to soar to $140 a barrel in order to bring the per-mile cost of driving, for example, back to 1980 levels.
Efficiency gains and economic flexibility are two reasons Medlock, for one, doesn't expect to see triple-digit crude prices throw the economy into contraction. "I don't think we're going to see a pullback like in the 1970s and 1980s," he says. He adds that while the housing and auto markets are showing clear signs of an economywide slowdown, he believes the United States will avoid a deep recession unless there's some sort of unexpected shock.
For his part, Simons believes the rising price of crude will come to be seen as a footnote in a history of this era. He expects coming years to be dominated by the cleanup of the housing mess. Even aside from the foreclosures sweeping the nation and wiping out homeowners, he points to billions of dollars of bad loans that threaten the health of the banking system. Banks that are busy raising money to sop up their losses will be inclined to tighten the reins on lending, possibly starving business expansion.
"We dodged one deflationary recession" after the tech bubble burst in 2000, he says. "Now the question is whether we can dodge another."
Oil at $100 a barrel? No sweat
The price of today's crude may sound frightening, but the U.S. economy should be able to absorb it, many experts insist.
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| Expensive crude won't help the U.S. economy, but it may not hurt it much, either. |
Video
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| Oil-rich national investment funds are buying big stakes in U.S. companies. Fortune's Andy Serwer says stay tuned. |
NEW YORK (Fortune) -- Crude's surge last week took its price to an eye-popping $100 a barrel. The rise comes on top of a 57 percent jump for 2007 and puts oil within reach of its all-time inflation-adjusted high above $102, hit back in 1980.
The latest jump means that Americans can expect to pay more for everything from gasoline to food and clothes. Those rising prices threaten to constrict consumer spending, which is repsonsible for more than two-thirds of domestic economic activity.
A sharp consumer slowdown would be bad news indeed, because the economy is already showing signs of strain. The government reported Friday that only 18,000 jobs were created last month, a mere fraction of the number needed to keep up with population growth. The Institute for Supply Management's factory index dropped below 50 in December, a sign manufacturing work is contracting.
So will $100-a-barrel oil be the straw that breaks the economy's back? Probably not.
After all, growth has persistently chugged along now for four years despite ever-increasing oil prices. Obviously, another huge rise in oil prices this year wouldn't help the economy - but it's not at all apparent that it would break it either. "We must accept the notion that at some point there's a price people won't pay" for oil, says Howard Simons, an oil industry veteran who has been measuring oil's impact on the economy for 30 years. But crude oil has seen its price rise fivefold in just six years, he adds, and "we haven't even approached the point of crimping consumer spending."
Simons notes that unemployment, at 5 percent, remains historically low, and that consumer spending hasn't fallen off a cliff even as foreclosures spike and house prices plunge. Moreover, history shows that trying to predict a recession is daunting.
Simons notes that just four years ago, a spike in oil prices took the price tag on a barrel of crude oil to $40 - a level many observers viewed as unsustainable. Voices predicting imminent recession grew louder as crude surged past $50, $60 and $70 a barrel. Yet as weak as parts of the economy now look - house prices are in free fall in much of the country and wage growth has been anemic - a sharp pullback in economic activity has yet to manifest itself.
Indeed, despite Friday's weak labor report, "These jobs gains indicate the economy did not enter a recession in the fourth quarter of 2008," writes Peter Morici, an economist at the University of Maryland's Robert H. Smith School of Business.
The economy's resilience is due in part to gains in energy efficiency over the past quarter-century, since the last oil shock. Ken Medlock, a fellow in energy studies at the Baker Institute for Public Policy at Rice University in Houston, also notes an energy-saving shift from a manufacturing-led economy in the 1970s and 1980s to today's service-oriented economy. He says that the price of crude oil would need to soar to $140 a barrel in order to bring the per-mile cost of driving, for example, back to 1980 levels.
Efficiency gains and economic flexibility are two reasons Medlock, for one, doesn't expect to see triple-digit crude prices throw the economy into contraction. "I don't think we're going to see a pullback like in the 1970s and 1980s," he says. He adds that while the housing and auto markets are showing clear signs of an economywide slowdown, he believes the United States will avoid a deep recession unless there's some sort of unexpected shock.
For his part, Simons believes the rising price of crude will come to be seen as a footnote in a history of this era. He expects coming years to be dominated by the cleanup of the housing mess. Even aside from the foreclosures sweeping the nation and wiping out homeowners, he points to billions of dollars of bad loans that threaten the health of the banking system. Banks that are busy raising money to sop up their losses will be inclined to tighten the reins on lending, possibly starving business expansion.
"We dodged one deflationary recession" after the tech bubble burst in 2000, he says. "Now the question is whether we can dodge another."
Oil eases on recession fears
Crude prices fall below $98 a barrel amid anxiety about the U.S. economy.
SINGAPORE (AP) -- Oil prices fell Monday as a report of growing unemployment in the United States raised concerns of an economic downturn there that could curb demand for oil.
The U.S. Labor Department said the unemployment rate jumped to 5 percent in December - its highest level in more than two years - from 4.7 percent in November. Analysts had expected December unemployment at 4.8 percent.
"Many economists in the U.S. have talked about the potential of the U.S. getting into a recession," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "This latest government report ... has added to the concerns about the economy."
Light, sweet crude for February delivery dropped 57 cents to $97.34 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract fell $1.27 to settle at $97.91 a barrel on Friday.
The government also said in the report that employers created just 18,000 jobs last month, less than the 70,000 analysts had expected and the smallest increase since August 2003.
Traders are becoming more concerned that record high energy prices are helping to push the economy into recession.
"If the U.S. goes into a significant downturn, that will impact oil demand there," Shum said. "If it goes into recession, that may also affect other economies, for example, demand in high-growth China could also slow down."
Any slowdown in the U.S. economy would hurt exporters in Asia that rely heavily on American consumer demand for sales and growth.
Energy traders could have interpreted the jobs data positively - in recent months, oil prices have often moved higher after the government reported dismal economic data because traders believe signs of economic weakness raise the chances that the Fed will cut interest rates. Lower interest rates weaken the dollar, whose decline has contributed to more expensive oil.
But analysts say a recession is seen as much more important to long-term energy prices than the easy money that is a byproduct of lower interest rates.
In London, Brent crude futures fell 27 cents to $96.52 a barrel on the ICE Futures exchange.
Heating oil futures fell 1.08 cents to $2.6727 a gallon while gasoline prices dropped 0.83 cents to $2.5027 a gallon. Natural gas futures added 0.1 cent to $7.842 per 1,000 cubic feet.
Crude oil barrel at $100 'not necessarily very high': OPEC president
AFP - Monday, January 7
On Wednesday the price of a barrel of crude reached 100.09 dollars (67.85 euros) in New York, before retreating at the close to 99.18 dollars.
Algeria's Energy Minister Chakib Khelil -- who took over the rotating presidency of OPEC on January 1 -- told AFP that the current surge must be seen "in relation to the real price", that is taking into account inflation.
The current oil price was therefore below its 1980 record of "between 102 and 110 dollars depending on estimates", he said.
Khelil said that high oil demand was being pushed by "China and India but also by the Middle East whose consumption has risen immensely".
"When you take that into account, 100 dollars is not necessarily very high," he said.
Khelil said Saturday, "The surge in price will probably go on until the end of the first quarter of 2008, before stabilising during the second quarter."
Speaking on the sidelines of a conference on the security of hydrocarbon pipelines in the Algerian capital, Khelil said a second quarter stabilisation was "probable."
PARIS (AFP) - - The price of 100 dollars for a barrel of crude oil is "not necessarily very high" given the high demand of oil and higher production costs, the president of OPEC said Sunday.
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On Wednesday the price of a barrel of crude reached 100.09 dollars (67.85 euros) in New York, before retreating at the close to 99.18 dollars.
Algeria's Energy Minister Chakib Khelil -- who took over the rotating presidency of OPEC on January 1 -- told AFP that the current surge must be seen "in relation to the real price", that is taking into account inflation.
The current oil price was therefore below its 1980 record of "between 102 and 110 dollars depending on estimates", he said.
Khelil said that high oil demand was being pushed by "China and India but also by the Middle East whose consumption has risen immensely".
"When you take that into account, 100 dollars is not necessarily very high," he said.
Khelil said Saturday, "The surge in price will probably go on until the end of the first quarter of 2008, before stabilising during the second quarter."
Speaking on the sidelines of a conference on the security of hydrocarbon pipelines in the Algerian capital, Khelil said a second quarter stabilisation was "probable."
High oil price will last until March: OPEC president
AFP - 1 hour 26 minutes ago
ALGIERS (AFP) - - The high price of oil will continue until the end of March 2008, the president of OPEC said Saturday.
"The surge in price will probably endure until the end of the first quarter of 2008, before stabilising during the second quarter," the Algerian Energy Minister Chakib Khelil -- who is also OPEC leader -- said on the sidelines of a conference on the security of hydrocarbon pipelines in the Algerian capital.
Khelil said a second quarter stabilisation was "probable."
He blamed the current surge in the price of crude on the international markets on the tensions in Pakistan, escalating violence in Nigeria -- Africa's largest producer -- and the reduction in US stocks of crude.
On Wednesday the price of a barrel of crude reached 100.09 dollars (67.85 euros) in New York, before retreating at the close to 99.18 dollars.
Khelil estimated that the oil market is currently "sufficiently supplied" but did not rule out an increase in production by the cartel at its next meeting in February.
That meeting will take place in Vienna on February 1. It will closely study predictions for world economic growth, notably in the US, which has been seriously affected by the credit squeeze from the sub-prime mortgage crisis.
"If a US economic recession takes hold, OPEC is not going to increase its current offering only to be called upon, later, to reduce it," he said.
OPEC, which currently produces 27.2 million barrels per day (bpd), accounts for about 40 percent of world oil output, the rest coming from producers who are not part of the organisation.
At the last OPEC meeting, at Abu Dhabi on December 5, OPEC decided to leave its current level of production unchanged.
| Jan 5, 2008 | |
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M'sia rations cooking oil after panic-buying
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| KUALA LUMPUR - MALAYSIA has slapped restrictions on cooking oil purchases after panic-buying triggered by rumours of price hikes caused severe shortages, reports said on Saturday.
From next week, customers will only be permitted to buy a maximum of 5kg of cooking oil at any one time, Domestic Trade and Consumer Affairs Minister Datuk Shafie Apdal said, according to the state Bernama news agency. To address the crisis, cooking oil production capacity was also being boosted by 10 per cent, he said. 'This is not the first time we are conducting a rationing exercise for controlled items. We did the same when there was a similar crisis involving sugar,' he said late on Friday. 'Cooking oil smuggling is a major cause of this crisis, and as such, I ask the Customs Department and the Anti-Smuggling Unit to help us in overcoming it,' he added. Supermarket shelves were stripped of cooking oil in several states, with retailers not able to replenish supplies fast enough. -- AFP |
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Now the oil price is at 99.24
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| Jan 4, 2008 | |
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Oil prices strike new record, then dip
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| NEW YORK - OIL prices leapt back above 100 dollars (S$143) in New York on Thursday on worries about tight supplies and US currency weakness, but eased back later in the day.
New York's main contract, light sweet crude for delivery in February, struck an all-time record of 100.09 dollars per barrel in early US floor trading but then settled with a loss of 44 cents at 99.18 dollars. On Wednesday, the contract had briefly touched 100 dollars for the first time. Brent North Sea crude for February settled down 24 cents at 97.60 dollars after hitting a record 98.50 dollars earlier in the day. The US Department of Energy said Thursday that US crude inventories had fallen by 4.0 million barrels in the week ended Dec 28. That was the seventh week in a row that stockpiles had dropped. Analysts also pointed to violence in Nigeria, the biggest oil producer in Africa, as a catalyst for the spike to 100 dollars on Wednesday. They added that crude was also being supported by concerns about stability in Pakistan, falling US energy inventories and cold weather, which was pushing up demand for heating fuel. Phil Flynn at Alaron Trading said oil and other commodities were 'on fire' as traders bid up prices helped by a soft dollar. 'If oil closes above 100 dollars the next target for oil would be close to 104 dollars,' he said. 'But I stress we must close above 100 or it could still be a sign that oil is at a 'blow-off' top.' Analysts said the symbolic 100-dollar price level would heap pressure on the Opec oil-producing cartel to increase output when its 13 members meet on Feb 1. 'If oil prices are still around 100 dollars per barrel in the run-up to the next Opec meeting we would expect quotas to be raised again,' said Julian Jessop, chief international economist at Capital Economics. The Organisation of thee Petroleum Exporting Countries froze its oil output levels at its last meeting in December, resisting calls for an increase to help cool sky-high prices that threaten to dampen global economic growth. The cartel, which produces about 40 per cent of world oil, insisted that the market was well-supplied and blamed market speculators for fueling prices. Analysts argue that rising oil demand has outstripped growth in supply, pointing to booming Asian economies like China and India and insufficient investment by oil exporters, which has led to a decline in spare production capacity. Crude prices have quadrupled over the past five years. -- AFP |
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