Quote:
Originally Posted by Americano
I disagree. While supply and demand are certainly a pricing factor with any commodity, oil futures are short-term contracts for near-term consumption and those futures set crude oil pricing. There has not been any demand for oil not supplied by current stocks. Producers do keep supply as close to demand as possible, a normal business procedure for any product.
|
Except in he past when prices got too high/demand became too close to supply for too long, it was far easier to ramp of production. Today that is not just not the case. Yes, producers intentionally keep supply and demand as close as possible, but presently we are in a situation where it is extremely hard to produce much more than the ~85 million barrels per day that has remained flat for the last few years. Many analysts and most geologists doubt that we will ever be able to produce much more than that. Meanwhile world demand based on predicted/desired growth is going to be @ 120 million barrels per day by 2030... nobody knows where that oil is going to come from... and that is the fundamental factor effecting pricing.
Quote:
|
When oil demand actually does exceed supply we'll see some real take-your-breath-away prices.
|
Agreed. We will also have lots and lots of war to determine who gets whatever supply is available.
Quote:
The Associated Press: Oil spikes to record above $117 a barrel after tanker attack
"There's clearly some geopolitical tension in the market," said Mark Pervan, senior commodity strategist at the ANZ Bank in Melbourne, Australia. "This will die down, but the market is pretty jittery at the moment," he said.
"Comments over the weekend by an OPEC official that the group isn't likely to increase production also supported prices on Monday.
Abdullah el al-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said Sunday that oil prices would likely go higher and that the group was ready to raise production if the price pressure was due to a shortage of supply — something he doubted.
"Oil prices, there is a common understanding that has nothing to do with supply and demand," al-Badri said on the sidelines of an energy conference in Rome."
"Also over the weekend, Iran's hard-line President Mahmoud Ahmadinejad was quoted Saturday as saying crude oil prices at $115 a barrel are too low, and that oil must "discover its real value."
A hint of things to come.
|
Its hard to trust pronouncements about the oil market from members of OPEC. They have far too many stakes in the game.
IMO, what we are seeing in terms of geopolitical tension, speculation, futures market, etc.. is a reflection of an underlying tension that has everything to do with supply and demand.
But i do agree with Iran's president. $115.00 does not reflect the true cost/value of oil. Its nowhere close to its real value in terms of its value to the economy and growth, as well as the environmental costs. $115.00 still reflect mainly a heavily subsidized commodity.
Andrew