Oil Demand? Iran Storing About 25M Barrels Of Crude In Tankers -Official

Wednesday, May 14, 2008

DUBAI (Dow Jones)–Iran is storing about 25 million barrels of heavy crude oil in tankers in the Persian Gulf as no buyers are stepping up to the plate, the country’s departing OPECOPECLoading… governor, Hossein Kazempour Ardebili, said Tuesday.

“We are using about 10-12 vessels to store the crude,” Ardebili told Dow Jones Newswires in an exclusive interview by phone from Tehran.

The stored crude is “the main proof that the market is oversupplied” and that prices are disconnected from fundamentals, he said.

“I know other countries are building up stocks as well, there are simply no buyers because the market has more than enough oil,” Ardebili, who resigned as the country’s governor to the Organization of Petroleum Exporting CountriesOrganization of Petroleum Exporting Countries
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earlier this week after over 23 years in the position, said.

However, decreasing production is not an option, he added.

“We believe that this build up should serve at assuring the market that the oil is there if needed,” Ardebili said.

He added that Iran’s current production level is 4.1 million barrels a day, while production capacity is at about 4.3 million barrels a day.

Nymex June crude was trading down 15 cents at $125.65 a barrel on Wednesday, while ICE June Brent was trading down 19 cents at $123.91 a barrel.

-By Majdoline Hatoum, Dow Jones Newswires; +9714-3644964; majdoline.hatoum@dowjones.com

Copyright (c) 2008 Dow Jones & Company, Inc.

(END) Dow Jones Newswires

14-05-08 0824GMT

Perhaps 60% of Today’s Oil Price is Pure Speculation

Comment: The mosaic is being put together by investors that this oil story has nothing to do with peak oil. Rather, it is yet another bubble created by Alan Greenspan and his boom bust economy, and now being perpetuated by Bernanke with his weak dollar and low interest rates:

The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?

First, the crucial role of the international oil exchanges in London and New York is crucial to the game. Nymex in New York and the ICE Futures in London today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil—West Texas Intermediate and North Sea Brent.

A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of Nymex, with Nymex President, James Newsome, sitting on the board of DME and most key personnel British or American citizens.

Read the entire story on Financial Sense

The Energy Non Crisis – Lindsey Williams

The Energy Non Crisis – By Lindsey Williams

My Old Haunt – Lehman is now predicting prices at $83 a barrel in 2009 and as low as $70 in 2010

Is $120 oil even real? Not if you ask the Saudis, or even Lehman Bros.

The investment bank’s oil expert said this week that the oil boom is due to bust. Economic growth across the globe will slow just as new refineries kick in, raising supply.

Recession or not, a U.S. slowdown will slacken demand sharply, right as new oil hits the market. “Supply is outpacing demand growth,” said Michael Waldron, Lehman’s oil strategist.

“Inventories have been building since the beginning of the year. We have pretty significant projects starting soon in Saudi Arabia, and large off-shore fields in Nigeria,” he said.

http://moneynews.newsmax.com/money/archives/st/2008/4/25/175710.cfm?s=al&promo_code=6231-1

Lehman is now predicting prices at $83 a barrel in 2009 and as low as $70 in 2010.

Although some years off, Brazil too has found as much as 8 billion barrels of light oil and gas offshore. The South American giant’s president says his country might well join OPEC when the Tupi field begins to pump, in 2011.

In addition, Middle Eastern sovereign wealth funds have pushed up the oil price by investing billions of their oil gains, ironically, in commodities index funds.

Now they could be looking to get out, warns Waldron. He figures the money effect has driven anywhere from $20 to $30 into the barrel price.

In addition, a weak dollar is holding oil prices high, according to a series of statements from OPEC leaders over the past week.

If you buy the views of OPEC’s various leaders, that’s at least another $20 of oil price that is not supported by the actual supply and demand situation.

In addition, Europe’s central bank seems bent on containing inflation there. A rate increase in Europe is sure to contain the euro’s rise against the dollar — if serious steps are taken soon.

Couple that with a lower-than-expected rate cut in the U.S. next week, or perhaps no cut, and the oil price drops as the dollar gains ground.

All this is having little immediate impact now, of course. U.S. gas prices at the pump hit $3.58 a gallon just as the summer driving season kicks off.

If nothing changes, analysts now expect gas to rise to as high as $4 a gallon in as little as a month.