Author Topic: Oil at $60 a Barrell (Read 866 times)

rpm · « **on:** June 23, 2005, 04:36:41 PM »

Link
Remember a few months back when I said gas would be $3.50 a gallon by Labor Day?

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Oil hits $60 on worries over demand
Thu Jun 23, 2005 02:05 PM ET
By Richard Valdmanis
NEW YORK (Reuters) - Oil prices surged nearly $2 on Thursday to a record $60 a barrel as dealers worried that continued strong demand growth would strain global production capacity.

U.S. crude futures on the New York Mercantile Exchange rose $1.91 to $60 a barrel, bringing gains this year to nearly 40 percent. London Brent crude on the International Petroleum Exchange rose $1.80 to $58.38.

"Where this cycle will end, we can all speculate on that, but I would suggest to you it will take a few years to sort out where it'll all end," Exxon Mobil CEO Lee Raymond told Reuters this week.

U.S. government data on Wednesday showed ballooning energy costs had yet to dent demand, underscoring concerns about tight spare oil production and refining capacity.

Distillate demand is roughly 7 percent higher than a year ago, adding to concerns that refiners will struggle to build stockpiles ahead of peak demand in the fourth quarter, while gasoline demand is running 2.5 percent higher.

"What's really driving the market are longer term concerns," said Helen Henton, head of commodities research at Standard Chartered. "Refinery capacity issues are enough to keep the price high, although maybe not to put it above $60 for long."

As refiners worked close to full-throttle to try to meet demand, overall crude stocks eased further from six-year highs touched last month, but were still 8 percent higher than a year ago, the U.S. data showed.

Signs that U.S. consumption is holding firm have encouraged many investors to keep betting on gains, though analysts say investment flows are becoming more cautious as the world tries to gauge the impact of record high prices.

The Organization of the Petroleum Exporting Countries is pumping virtually flat out, but has said repeatedly that it cannot solve the problem of a global lack of refining capacity.

Drunky · « **Reply #1 on:** June 23, 2005, 04:41:18 PM »

I thought we invaded Iraq for oil.

Bodhi · « **Reply #2 on:** June 23, 2005, 04:48:32 PM »

this whole idea of hightened demand and limited production is bull crap.

There are pumps sitting idle all over the place right now. The US limits the amount of production per day per well.

I blame the media for over hyping this false shortage.

Gdamn imbeciles.

Hoarach · « **Reply #3 on:** June 23, 2005, 05:00:00 PM »

See rule #5

Drunky · « **Reply #4 on:** June 23, 2005, 05:05:47 PM »

For the sarcastically impaired...

I was being sarcastic that we invaded Iraq for oil.

Eagler · « **Reply #5 on:** June 23, 2005, 05:11:12 PM »

it's all so bush and his oil buds get richer ... lol

how about so that the fat cats could short some of their stocks that have been doing too well so they could make $$ coming and going... it's all a scam

VOR · « **Reply #6 on:** June 23, 2005, 05:29:35 PM »

The article points the finger at refining capacity vs. demand and public and investor panic. I can't disagree.

rpm · « **Reply #7 on:** June 23, 2005, 06:23:02 PM »

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Originally posted by Bodhi
this whole idea of hightened demand and limited production is bull crap.

There are pumps sitting idle all over the place right now. The US limits the amount of production per day per well.

I blame the media for over hyping this false shortage.

***** imbeciles.

Bodhi, It's not well production that is a shortage. It's refinery capacity. We need more refineries to handle demand.

They are bidding on oil futures. If there's a shortage on the supply available from the refinery, it causes the price to increase. The middleman is making all the windfall profit.

Toad · « **Reply #8 on:** June 23, 2005, 06:34:40 PM »

Not long ago someone posted on why there's no refinerys being built or even planned.

Was that charon? Good piece, as I recall.

Silat · « **Reply #9 on:** June 23, 2005, 06:55:15 PM »

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Originally posted by Drunky
I thought we invaded Iraq for oil.

But not to bring the price down.

Nashwan · « **Reply #10 on:** June 23, 2005, 06:56:05 PM »

There might not be any new refineries, but capacity in the US has been increasing.

According to the annual BP review of world energy, in 1994 refinery capacity stood at 15,434,000 barrels a day, by 2004 it was up to 17,042,000 barrels a day.

Consumption has also increased, from 17,719,000 to 20,033,000 barrels a day.

In the same time, production in the US has gone down from 8,389,000 to 7,241,000 barrels a day.

So refinery capacity is roughly keeping up with demand for oil in the US, and over the last 10 years refinery capacity has gone from 1.84 times production to 2.35 times production.

World excess refinery capacity actually increased very slightly between 1994 and 2002, but has since halved, due to a sudden rise in production in 2003/04 (and has probably got worse this year)

john9001 · « **Reply #11 on:** June 23, 2005, 07:32:20 PM »

but but i need a 400hp car

Sandman · « **Reply #12 on:** June 23, 2005, 07:34:31 PM »

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Originally posted by john9001
but but i need a 400hp car

Hehe... remember when we were kids, and a 300HP car was considered powerful?

Ripsnort · « **Reply #13 on:** June 23, 2005, 07:35:48 PM »

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Originally posted by john9001
but but i need a 400hp car

How about a 450+ hp car that gets 14 mpg city and 21 highway?
I'm ordering in June 06'

Gas prices? Who cares!

Life is short, enjoy it.

{Next post space reserved for Drunky}

Maverick · « **Reply #14 on:** June 23, 2005, 07:47:19 PM »

Nashwan,

By the figures you posted refinery capacity has not kept up with demand. That indicates a continuing shortage capacity over demand and rising prices as a result.

FWIW I recall reading something another person posted here about the refineries being at or near full capacity. Given the continuing increase in the number of motor vehicles the demand can't help but continue to grow, yet I haven't read of any new refineries being built. A continuing spiral. A possible reversal of the spiral would be to decrease exports of oil. I have no idea how that would affect ballance of trade.