a_unique_person
Director of Hatcheries and Conditioning
http://afr.com/articles/2005/03/18/1111086004998.html
All the signs are there, production has peaked, and demand is still growing. The market certainly seems to recognise that. The Iraq invasion was a futile roll of the dice to secure a supply of oil, but 200Billion has been blown on achieving nothing.
While OPEC ministers were being feted by Iran's president on Wednesday with Persian food and Kurdish music, traders in the oil pit of the New York Mercantile Exchange sent them an unexpected message.
Hours after the Organisation of Petroleum Exporting Countries, which was meeting in Isfahan, Iran, decided to lift its production ceiling by 500,000 barrels a day, prices in New York rose to a new high.
On Thursday, US time, crude oil futures rose sharply, with the April contract hitting a record $US57.60 a barrel on the New York Mercantile Exchange before closing down US6¢ at $US56.40 a barrel.
Crude prices have risen about 50per cent in the past year. Some analysts believe $US100 a barrel would be a possibility if supplies were disrupted by an event such as another war in the Middle East.
For OPEC, the situation is paradoxical. The group is uncomfortable with today's high prices. The OPEC president said he did "not accept this", while Saudi Arabia, the cartel's most powerful member, favours oil at $US40 to $US50.
But there is not much OPEC can do. Its 11 members are pumping close to 29 million barrels a day and do not have much more production capacity left to tap. Saudi Arabia, which has been pumping 9.5 million barrels a day since the beginning of the year, can add another million barrels or so, but the oil is mostly heavy crude, which is less in demand because it is harder to refine.
All the rest of OPEC can do is count record revenues and plan expansions. But some countries - including Iran, Indonesia, Venezuela and Libya - are struggling to meet production quotas.
All the signs are there, production has peaked, and demand is still growing. The market certainly seems to recognise that. The Iraq invasion was a futile roll of the dice to secure a supply of oil, but 200Billion has been blown on achieving nothing.