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Discussion Starter · #1 ·
Saudi Arabia's oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.

Consumers have urged the exporters' group to pump more crude to put a cap on oil, which surged to more than $127 a barrel this month, its highest level in 2 1/2 years amid unrest in North Africa and the Middle East.

Oil Ministers from Kuwait and the United Arab Emirates echoed Saudi Arabia's Ali al-Naimi's concerns about oversupply and said rocketing crude prices were out of the hands of OPEC, which next meets in June.

"The market is overbalanced ... Our production in February was 9.125 million barrels per day (bpd), in March it was 8.292 million bpd. In April we don't know yet, probably a little higher than March. The reason I gave you these numbers is
to show you that the market is oversupplied," Naimi told reporters.

Two Saudi-based industry sources told Reuters last week the kingdom had cut output due to poor demand, prompting selling by traders who saw it as a sign of a well-supplied market.

But crude rebounded later in the week on optimism about the state of the U.S. economy.
Naimi's words are the clearest indication yet that OPEC is unconvinced there is a need for more oil despite the civil war that has slashed Libyan output and expectations Japanese demand will rise as it scrambles to rebuild its earthquake-shattered electricity grid.

"These statements underscore the breadth of the security premium currently in (oil) prices. Overall supplies are sufficient," said John Kilduff of energy hedge fund Again Capital. "As we've seen in the past, however, a well-supplied market is not always a barrier to very high prices."

IEA: Market Tightening

Naimi, who has previously spoken of $70 to $80 a barrel as a desirable range for crude, declined to comment on the price. Oil prices fell early last week on concern that demand may be eroding under pressure from high prices, but rebounded on Friday following encouraging U.S.
economic data.

Nobuo Tanaka, the head of the International Energy Agency, which represents oil importers' interests, stopped short of saying OPEC needed to boost output, but suggested the group be more flexible in its thinking about supply.

"The market is getting tighter and if it is tighter the price may go up, which may have a negative impact to economic growth," Tanaka told reporters. OPEC last formally discussed output policy in December and is not scheduled to do so again until June. Members have ruled out holding an emergency meeting before then.

Unrest in North Africa and the Middle East has left Saudi Arabia and other Gulf nations nervous of political instability and of a sharp fall in oil prices that could lead to a fiscal crunch while populations are restive.

The kingdom promised nearly $93 billion in handouts to its citizens in the wake of the wave of unrest that swept the Arab world this spring, making a sharp fall in oil prices a major risk for its budget.

Saudi Arabia and some other OPEC members unilaterally boosted oil production after the March uprising against Libyan leader Muammar Gaddafi shut down the bulk of the North African OPEC member's oil industry but weak demand for the additional production appears to have prompted the reduction in output.

Naimi said Saudi Arabia had sold 2 million barrels of a special blend of crude that tried to replicate the high quality Libyan barrels lost. Demand for the blend has been tepid, according to oil traders.

Kuwait may also have reduced output from the 2.42 million bpd analysts and oil traders estimated it pumped in March.

The Gulf state's Oil Minister Sheikh Ahmad al-Abdullah al-Sabah told reporters Kuwait was currently producing 2.2 million bpd but did not say whether output had been reduced.

http://www.cnbc.com/id/42637280
 

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:agree:


We got tons more oil coming from the gulf since 2001, and South America, South Africa, Canada, Russia....more.

Even with Libya out of the loop, there is no problem with supply.

And unlike us, China is hammmering out the new power plants in all forms shapes and sizes.


The only problem is investors.

Paper money.
 

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:agree:


We got tons more oil coming from the gulf since 2001, and South America, South Africa, Canada, Russia....more.

Even with Libya out of the loop, there is no problem with supply.

And unlike us, China is hammmering out the new power plants in all forms shapes and sizes.


The only problem is investors.

Paper money.
Investors can not control the price of commodities in the long run. They can have influence over the short term, but if their prices go too high, demand collapses and the price goes with it. Exactly what happened in 2008. Same for Saudi Arabia's supply. They know that if they let supply get too short, and price goes too high, demand will collapse, price will collapse, and their revenues will go with it. It is in their best interest to keep the price relatively stable. They know it, and they will do it.
 

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Time to put the death knell to these fookers. Start poking holes in every state and shallow waters. Put up prize money for oil efficient innovations. Aim for the nexus of increasing renewables and decreasing petroleum so that we can become a net exporter of oil AND the technology to reduce use of it, thus cornering the world energy markets.

:nuts:
 

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Investors can not control the price of commodities in the long run. They can have influence over the short term, but if their prices go too high, demand collapses and the price goes with it. Exactly what happened in 2008. Same for Saudi Arabia's supply. They know that if they let supply get too short, and price goes too high, demand will collapse, price will collapse, and their revenues will go with it. It is in their best interest to keep the price relatively stable. They know it, and they will do it.
The only time oil demand goes down is when the economy tanks. That is what brought down oil prices in 2008. I hope that we don't have to go through that again to get oil prices under control again. Right now the Saudis need money...our money...to keep thier people fat and happy so they don't pull an Egypt like up-rising. They are very happy right now with the through the roof oil prices because it is keeping their bank accouints flush just at the time they need it.

There is a play going on right now which is proven by the constantly up-beat outlook. Nothing that should dirve prices through the floor do much at all, but every little sign of possible increases in oil consumption act like a freight train to push prices higher. This is a sure sign of a bubble and as soon as you get enough little guys in the market (the grease) the big boys will let thing go back to normal.
 

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The only time oil demand goes down is when the economy tanks. That is what brought down oil prices in 2008. I hope that we don't have to go through that again to get oil prices under control again. Right now the Saudis need money...our money...to keep thier people fat and happy so they don't pull an Egypt like up-rising. They are very happy right now with the through the roof oil prices because it is keeping their bank accouints flush just at the time they need it.

There is a play going on right now which is proven by the constantly up-beat outlook. Nothing that should dirve prices through the floor do much at all, but every little sign of possible increases in oil consumption act like a freight train to push prices higher. This is a sure sign of a bubble and as soon as you get enough little guys in the market (the grease) the big boys will let thing go back to normal.
Overall, I agree. But I do believe high prices reduce demand enough to ultimately lower the price. Already, there are reports of drivers cutting back on miles driven in this current run-up in prices. When millions of people cut back a little, the result is a noticeable drop in demand. The last drop definitely coincided with the world economic collapse, but the reason was that the collapse caused a sudden drop in demand, which has lingered until recently.
 

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Time to put the death knell to these fookers. Start poking holes in every state and shallow waters. Put up prize money for oil efficient innovations. Aim for the nexus of increasing renewables and decreasing petroleum so that we can become a net exporter of oil AND the technology to reduce use of it, thus cornering the world energy markets.

:nuts:
But but but that would mean hydraulic fracturing and that is too evil we simply can't do that
 

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Time to put the death knell to these fookers. Start poking holes in every state and shallow waters. Put up prize money for oil efficient innovations. Aim for the nexus of increasing renewables and decreasing petroleum so that we can become a net exporter of oil AND the technology to reduce use of it, thus cornering the world energy markets.

:nuts:

It wont matter.

Investors and speculation dont need supply or demand to continue the price increases.

Only the lower investors from the run-in and black market trading advantages to profit off the lower pyramid.

Just like the past urainum bull markets, mining investors, rendered nuke plants too costly,

just like corn, prices and processing equipment rendered ethanol too costly.
 

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Investors can not control the price of commodities in the long run. They can have influence over the short term, but if their prices go too high, demand collapses and the price goes with it. Exactly what happened in 2008. Same for Saudi Arabia's supply. They know that if they let supply get too short, and price goes too high, demand will collapse, price will collapse, and their revenues will go with it. It is in their best interest to keep the price relatively stable. They know it, and they will do it.

they still have long term influences also, so your not dead right correct.


Each cycle reveals new price plateaus and limits.

And as new investors, hedge funds enter the market constantly, the amount of funds parked increases at any given time, boosting the lows and highs farther up with permanance.
(sp?)
 

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they still have long term influences also, so your not dead right correct.


Each cycle reveals new price plateaus and limits.

And as new investors, hedge funds enter the market constantly, the amount of funds parked increases at any given time, boosting the lows and highs farther up with permanance.
(sp?)
In current dollars, you may be right. But I've shown graphs of gasoline prices in constant dollars before, and they generally always fall to about the same level after spiking during a crisis or price run-up. Here's a graph that doesn't include the '08 run-up or the current one. But after '08, it fell to levels consistent with this graph.

 

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Overall, I agree. But I do believe high prices reduce demand enough to ultimately lower the price. Already, there are reports of drivers cutting back on miles driven in this current run-up in prices. When millions of people cut back a little, the result is a noticeable drop in demand. The last drop definitely coincided with the world economic collapse, but the reason was that the collapse caused a sudden drop in demand, which has lingered until recently.
That reduction in demand has done absolutly nothing to lower prices....have you noticed that. The wallstreet guys just talk up the improving economic picture, and the problems in the middle east even though they dont effect supply at all. This is a market driven bubble. When the wall street guys get enough suckers to buy the hugely overpriced futures contracts of thier "important" clients the price will fall to where it should be. Then they will churn the price machine up again and make the same play till we all get wise. By then they will have made a large fortune and they will move onto the next scam. :crazy:
 

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Discussion Starter · #12 ·
That reduction in demand has done absolutly nothing to lower prices....have you noticed that. The wallstreet guys just talk up the improving economic picture, and the problems in the middle east even though they dont effect supply at all. This is a market driven bubble. When the wall street guys get enough suckers to buy the hugely overpriced futures contracts of thier "important" clients the price will fall to where it should be. Then they will churn the price machine up again and make the same play till we all get wise. By then they will have made a large fortune and they will move onto the next scam. :crazy:
:laughing: :agree:
 
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