note: i'm not sure but you may have to take one of the free subscriptions to the ft to see the video linked below.
Quote:
Oil hits new record near $140
By Carola Hoyos and Javier Blas in London and Andrew England in Abu Dhabi
Published: June 16 2008 09:45 | Last updated: June 16 2008 14:14
Crude oil prices jumped on Monday to a fresh record high of almost $140 a barrel after the US dollar fell and news about a possible Saudi Arabia’s oil output increase were overshadowed by fresh disruption in the North Sea oil production.
Daily View: Oil nears $140 despite Saudi move
Carola Hoyas on Saudi Arabia’s ‘high risk’ strategy to dampen oil prices
In early trading in New York, West Texas Intermediate crude oil jumped to $139.89 a barrel, above the previous record of $139.12 set in early June.
The dollar weakened after a bearish report on US manufacturing, reaching a low of $1.5496 against the euro. “The main factor of the price jump in early New York trading is the fresh weakening of the dollar,” a trader said.
In addition, traders said that a fresh disruption in the North Sea oil production of high quality oil was also supporting the market. StatoilHydro said it had shut down 150,000 b/d of production at its Oseberg high quality oil field after a fire in a platform.
Prices had earlier reacted cautiously to Saudi Arabia’s plans to boost its oil production to its highest level in more than 25 years in order to bring down record prices and ease political pressure from the US and other developed countries.
The increase in production would come as Saudi Arabia completes the development of its giant Khursaniyah field soon, industry executives and diplomats said, increasing its output capacity by up to 500,000 barrels a day, traders and analysts said.
Traders said Saudi Arabia was more likely to lift production to about 9.7m b/d in July, the highest level since 1981.
Ed Meir, of MF Global in New York, said that officially it seemed the Saudis had not made a decision on the final number, but added: “The ongoing speculation is succeeding in pressuring prices.”
Ban Ki-moon, United Nations secretary-general, who was visiting the country on Sunday, said that King Abdullah told him he viewed oil prices as “abnormally high”.
Mr Ban said the Saudi leader was “willing to do what he could to bring the oil price to adequate levels”. But by acting unilaterally Saudi Arabia could cause division within the Opec oil cartel, many of whose members are unable to boost production.
After a series of hints by Gulf and industry officials in the past few days, oil traders now expect Saudi Arabia to announce a substantial increase in supplies when oil ministers meet in Jeddah on Sunday, although the announcement could come beforehand. This has significantly upped the stakes of the hastily called summit, making it more likely prices will rise from current levels if Saudi Arabia’s actions fail to match expectations.
“The Saudis are working on a massive increase in output capability and could announce it at Jeddah,” an industry official said.
There is still a large degree of uncertainty about what exactly the world’s biggest oil exporter will do, meaning oil prices will likely be volatile this week.
Saudi Arabia may soon have the capacity to pump more oil. But how much the country will chose to bring to the market remains unclear.
As it brings the huge Khursaniyah field on line, the kingdom could ship all the extra barrels to market or perhaps reduce output from some fields that produce less desirable heavy crude.
Adam Sieminski, analyst at Deutsche Bank, said: “A disappointment would be that they say nothing other than ‘markets are well supplied and speculators are driving the price up’.
He added that “a substantive result” would be if the Saudis announced that the Abu Hadriya, Al Fadhili and Khursaniyah upstream projects that were due in late 2007 were on line and that they would like to see some build-up in inventories.
Copyright The Financial Times Limited 2008
|
http://www.ft.com/cms/s/0/5f4eb95e-3...0779fd2ac.html
the last two paragraphs are kinda interesting.
the problem of commodity future markets as the driver of this price spiral was at the center of the G8 meeting over the weekend. typical incoherence...
http://www.ft.com/cms/s/0/f6dddb5a-3...0779fd2ac.html
here's a little video clip featuring john damgard, president of the commodity futures association, who was interviewed late last week at the associations annual conference. it's interesting as well:
http://www.ft.com/cms/93ece7c0-07af-...4&fromSearch=n
his basic arguments are not terribly surprising:
he opposed any attempt to regulate the commodity futures market.
he invokes the spectre of american attempts to regulate being matched everywhere--at the same time, the underlying claim is that commodity futures circulate in an almost purely transnational context now and are in a sense beyond the reach of nation-state based regulatory moves.
the third main point: he claims, in that kinda wan manner, that what is driving prices up is the decision of institutional portfolio managers to shift into commodities markets, away from stock, etc., and the accompanying changes this move of very large players into this field have engendered. this he presents as "natural" as over against accusations of "manipulation"...
there is a scenario that one could build around this that would link up many factors unfolding in seemingly disparate areas over the past 8 years or so, including the neo-con rationale for the war in iraq--which i maintain was about attempting to alter the balance of power within globalizing capitalism in favor of the americans by establishing them as a military hegemon, the "lone remaining superpower"--which presumably would have enabled the americans to have a kind of political influence that would have protected them to some extent from the play of "market forces" that their economic ideology cannot but force them to understand as "natural"---well, that sure as hell didn't work, now did it? maybe this kind of scenario is, at the level of structure, what offended the neocon right about globalizing capitalism clinton-style: too multi-lateral, too much the americans as a player amongst players, not imperial enough.
if that's right, then structurally the americans are now in exactly the place that the neo-cons were worried about, but they arrived there because the neo-cons fucked up.
within this, there are the shorter-term problems/changes that i keep posting about to this thread---and it seems to me that the problem is becoming a bit clearer: this is *not* about supply-demand matters at the level of actual petroleum--this is a *political* problem. the politics are centered on the institutional consequences of neoliberalism itself.
there are probably intermediate steps to the above that should be filled in.
but let's say this scenario is accurate: that the primary driver of the prices spike in oil and by extension in food follows from activities in the transnational commodity futures market--that part of it is a function of the shift in institutional investment away from stock/binds etc and into futures--the index speculation that i've posted about above--these markets operate at a transnational level, so develping and imposing coherent regulation is going to be a problem for nation-states, even as the dominant political ideologies which inform decision-making are stuck, hopelessly it seems, with nation-states as their cognitive and operational center.
what happens now?
if this is the case, what relation is there between electric cars, say, and the actions of these futures markets?
seems to me that there is a disconnect between the responses folk have been talking about and what seems to be actually going on.
but what do you think?