Oil prices dip on jump in US crude reserves

Posted: 04 June 2009 0404 hrs

A view of the Tawke oil field and plant that is linked with the Jihan Turkish pipeline in Zakho, 400km north of Baghdad.

NEW YORK: Oil prices plunged on Wednesday from seven-month highs after a surprise jump in American crude reserves that indicated weaker-than-expected demand, and a US dollar rebound.

New York's main futures contract, light sweet crude for delivery in July, sank 2.43 dollars from Tuesday's close to 66.12 dollars per barrel. The contract had surged to 69.05 Tuesday.

London Brent North Sea crude for July delivery tumbled 2.29 dollars to 65.88.

Prices dipped as a result of the dollar's rebound after sinking to new lows and a surge in oil inventories in the United States, the world's largest energy consumer.

The US Department of Energy announced on Wednesday that American crude oil inventories leapt 2.9 million barrels in the week ending May 29 to reach 366 million barrels. Most analysts had expected a 1.7-million-barrel drop.

"Continued demand destruction continues to make for a bearish big picture, underscoring that recent price gains were not underpinned by market fundamentals," said Antoine Halff, deputy head of research for Newedge.

The higher stocks were attributed to rebounding imports.

"The low imports over the last few weeks were - as we said over the last few weeks - not the result of a lack of crude but were rather the result of refiners not buying because their stocks were ample," said Hussein Allidina of Morgan Stanley Research.

"The outlook for oil prices may have just taken a significant turn for the worse," warned Nic Brown of Natixis, analyzing the new US inventory levels.

Brown said that both US and Chinese strategic oil reserve levels were close to, if not completely, full.

This week, oil has punched seven-month peaks on the back of a weakening US currency, which makes dollar-priced oil cheaper for holders of stronger currencies and in turn stimulates demand and pushing up prices.

Meanwhile the market was also affected by reports that some members of the Organisation of the Petroleum Exporting Countries (OPEC) were not adhering to agreed output cuts.

"We did get some reports about OPEC output going up for the first time in several months," MF Global analyst John Kilduff said on Tuesday.

OPEC, which pumps 40 percent of world oil, cut its production target three times late last year to stabilise prices, which tumbled from record highs above 147 dollars in July to 32.40 dollars in December.

The group, which last week decided to keep output unchanged amid signs of economic recovery and higher crude prices, seeks to influence prices by setting an output quota, with members given individual production targets.

The Saudi cabinet said on Monday that it sees 75 to 80 dollars a barrel as a fair price for crude. Saudi Arabia, the world's biggest oil exporter, is the de facto head of the OPEC oil producers' group. - AFP/de

From ChannelNewsAsia.com; see the source article here.

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Obama seeks fresh start

Will this really trigger a change, an impact in the US, the whole world?

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WASHINGTON — President Barack Obama will journey to the centre of Arab-Muslim civilisation this week to begin the daunting task of draining deep mistrust of the United States felt across the Islamic world.

In Egypt on Thursday, Mr Obama will make a personal address to the world's Muslims, harnessing his own ancestral ties to Islam and globalising his message of change in a speech rich in trademark political ambition.

His trip comes as some observers scent a moment of opportunity amid the perpetual Middle East crisis.

But others see only peril, with a showdown gathering pace between Washington and Israel over Jewish settlements and no end in sight to Iran's nuclear drive.

This trip's first stop, on Wednesday, will be Saudi Arabia, for talks with King Abdullah, seeking Arab support for US peace efforts.

But the highlight will be the speech at the University of Cairo, co-hosted by Al-Azhar University, an ancient hub of Islamic scholarship.

Mr Obama may try to use the charismatic rhetoric which helped make him president as a balm for region-wide mistrust of the US.

"I want to use the occasion to deliver a broader message about how the United States can change for the better its relationship with the Muslim world," he said last week.

The speech will also be a promise kept — way back in the presidential campaign Mr Obama pledged to speak before a major Islamic forum.

In Egypt, he will make references to the Islamic faith of some of his paternal family in Kenya, time spent in Indonesia as a young boy and contacts with Muslim communities in Illinois.

"The President himself experienced Islam on three continents before he was able to visit, really, the heart of the Islamic world," said foreign policy adviser Denis McDonough.

Some analysts predict though Mr Obama may fall short. "There's nothing Barack Obama could say to Muslims on June 4 that will make the US popular and he shouldn't try," said Mr Jon Alterman, of the Center of Strategic and International Studies.

"America's underlying interests are simply not allied with the policies that many Muslims around the world would like to see the US pursue."

The US image in the Muslim world has been stained by the invasion of Iraq, stalled Palestinian hopes for statehood and Bush administration acquiescence in Israel's offensives in Lebanon and Gaza. AFP

From TODAYonline.com, World news – Monday, 01-Jun-2009; see the source article here.

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70-80 good price for oil: French economy minister

AFP - Sunday, May 10

RIYADH (AFP) - - French Economy Minister Christine Lagarde said Saturday that it would be good if oil prices settled at between 70 and 80 dollars a barrel.

"We want less volatility, more predictability," Lagarde said ahead of talks on Sunday with oil giant Saudi Arabia's petroleum minister Ali Naimi.

"Most people would agree that anywhere between 70 and 80 dollars would be good," she said.

Lagarde was on a 24 hour visit to the Saudi capital for discussions on a range of bilateral economic issues, including promoting France's high-speed rail expertise for the multi-billion-dollar Mecca-Medina rail project, and fashioning cooperation on nuclear power technology.

Lagarde said that Saudi King Abdullah and French President Nicolas Sarkozy had earlier agreed to seek mechanisms to stabilize oil prices, after last year's climb to nearly 150 dollars a barrel and subsequent plunge to just 30 dollars.

However, she said, the possible mechanisms for that still need to be explored.

Oil prices topped 58 dollars a barrel in New York trading Friday, the highest since mid-November.

Lagarde, who will meet King Abdullah and other top economic officials Sunday, said she will also encourage Saudi Arabia to follow up on its pledge to contribute to the expanded capital of the IMF.

This follows the G20 agreement in London at the beginning of April to triple the IMF's funds to 750 billion dollars.

"We all have to contribute more," she said, noting that most of the G20 members had yet to confirm their contributions.

"In London all of us, including the Saudis, signed a commitment, so we have to deliver."

Lagarde said she would also discuss with her Saudi counterparts updating the French-Saudi tax treaty to address issues that had arisen since the treaty was first signed some 20 years ago.

From Yahoo! News; see the source article here.

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