Oil above $78 as OPEC fails to calm market - Reuters

[Eugene]

Source: Reuters

Oil above $78 as OPEC fails to calm market
Wed Sep 12, 2007 8:23AM EDT

By Jane Merriman

LONDON (Reuters) - Oil held above $78 a barrel on
Wednesday, close to its record high, after OPEC's
modest output increase failed to allay fears over
stock levels during the coming winter.

U.S. light crude for October delivery was 7 cents
higher at $78.30 a barrel by 8:15 a.m. EDT, after
coming within a whisker of August 1's record high
of $78.77 on Tuesday.

London Brent crude was up 4 cents at $76.42.

OPEC agreed to raise crude output by 500,000
barrels per day (bpd) from November 1 at its
meeting in Vienna on Tuesday, in a gesture to
consumer nations concerned about the economic
impact of high oil prices and rapidly diminishing
fuel stocks.

-snip-

Read more: http://www.reuters.com/article/hotStocksNews/idUSSP5715420070912

[endarkenment]

1. That's odd.

I thought it was hovering around 70 just a short while ago. Is this a reflection of the dollar's collapse or is Bombiran a done deal?

[GliderGuider]

2. As far as I can tell

it simply represents a growing awareness of the tightness of the global oil supply. The risk premiums you mention may be adding up to $8.00/bbl, but probably no more than that. It's starting to sink in to the market that we're at Peak Oil.

[4dsc]

3. comments from the energybulletin.net

Kevin Drum at Washington Monthly points out:
OPEC agreed today to increase oil production by 500,000 barrels per day. But check out this sentence in the New York Times coverage:

Consuming nations, including the United States, have been urging OPEC producers to put more oil on the market, warning that the winter months would see a big jump in consumption that non-OPEC producers would not be able to meet.

Note that this is now apparently conventional wisdom: the only spare oil production capacity left in the world is in OPEC. The non-OPEC peak isn't five years off, or ten years off. It's now.


Contributor Hurricane Jim writes:

500,000 bpd...are we supposed to be impressed by this? I hate to say it, but that's about enough petrol for N. VA to take one trip to the Wal-Mart and back. I fear that the issue here, with so called production increases, isn't about markets or capacity, but more about letting the cat out of the bag...as in their "spare capacity" isn't all it's cracked up to be anymore, a fact the world is probably going to find out about sooner rather than later.


http://energybulletin.net/34624.html

[GliderGuider]

4. I just saw crude trade over $79.00 on NYMEX

http://www.nymex.com/index.aspx