Oil producers and consumers to duke it out June 22

[FRED]

Oil producers and consumers meet on prices June 22

A collection of pre-meeting comments

(Reuters) - The world's top oil exporter Saudi Arabia finds the price of fuel unjustifiable and has called a meeting of producers and consumers on June 22 to help find a solution.

The two sides have long blamed each other, but the Saudi cabinet, chaired by King Abdullah, issued instructions to bring them together in Jeddah after oil rose last week by $16 a barrel in just over 24 hours to above $139.

Below are the latest comments by ministers and officials who are attending, or are likely to attend, the event.

Producers

OPEC SECRETARY GENERAL -- Abdullah al-Badri
June 10, London, oil near $133: "I ask through you, through Reuters, really we need some calm. We are panicking too much."
"The situation is unbearable as far as we are concerned. I want to say, there is no shortage now and in the future."

OPEC PRESIDENT -- Chakib Khelil, Algerian oil minister
June 10, Algiers, oil near $131: "It would not be wrong to discuss not only the current oil market situation, but also prices and costs because if the price of a barrel is increasing, the price of equipment and services has also tripled in two years."
"We should also not ignore, above all, the central issue which is speculation."

SAUDI ARABIA -- Oil Minister Ali al-Naimi
June 8, Riyadh, oil around $138: The Saudi oil minister agrees with his Pakistani counterpart that a double-digit price rise was unjustified and unrelated to market fundamentals.

IRAN -- Oil Minister Gholamhossein Nozari
June 10, Tehran, oil near $132: "... No one party is on its own able to solve the oil market's problems," said Mohammad Ali Khatibi, Iran's OPEC Governor.

UAE -- Oil Minister Mohammed al-Hamli (will attend)
June 10, Alberta, Calgary, oil near $131: "There is no shortage of crude oil in the market. Inventory levels are huge."
"If you look at prices moving by $10 a day, that doesn't make sense. That's crazy."

KUWAIT -- Oil Minister Mohammad al-Olaim (will attend)
June 11, Kuwait, oil above $133: "The most prominent factors leading to oil price swings are speculation in world markets and the limitations in the number of oil refineries in consuming countries and the decline in the price of the dollar."

VENEZUELA -- Oil Minister Rafael Ramirez
June 12, Caracas, oil above $136: Ramirez said the Saudi meeting would not be a forum to discuss output.
"It is not the place to agree any of these things. I hope the main consumer countries will understand that OPEC exists and that we have developed an extraordinary role in keeping the market balanced."

NIGERIA -- Minister of State for Petroleum Odein Ajumogobia
June 11, Lagos, oil above $134: "I guess it presents a welcome opportunity to review the pretty much unanimous conclusions of the Rome meeting as to the factors giving rise to the current unprecedented high price and volatility."

IRAQ -- Oil Minister Hussain al-Shahristani
June 12, Amman, oil near $134, "We believe that OPEC boosting oil output would not tackle the problem of the rise of oil prices. Even if Saudi Arabia raises production this will not influence the market."
"OPEC is not controlling global oil prices now. Futures market speculators are the ones who are behind the hike in prices."

LIBYA -- OPEC delegation head Shokri Ghanem
June 12, Tripoli, oil near $133: "Speculation is playing an important role but it is not the only factor. It is the erosion of the dollar, it is geopolitics, it is refinery bottlenecks, it is the increase in demand, it is peak oil getting soon."

NON-OPEC
MEXICO -- Energy Minister Georgina Kessel
June 11, Mexico City, oil above $134: "We have been very mindful of the call that has been made to increase production. You know perfectly well the problem that we are facing in Mexico."

Consumers

UNITED STATES -- Energy Secretary Sam Bodman (will attend)
June 11, oil near $132: "The issue is we have a difference of opinion (with Riyadh). The reason we're looking at these very high prices for oil is strictly supply and demand."

JAPAN -- Minister of Economy, Trade and Industry Akira Amari (will attend)
June 13, Tokyo, oil above $136, "Funds are buying futures on the view that there could be a shortage in the future although supplies are sufficient now. Taking action to avoid future shortages, such as raising the production capacity ceiling, would be the best message."

BRITAIN -- Prime Minister Gordon Brown (will attend)
June 12, London, oil near $133, "I am not going to Jeddah expecting there is going to be a short-term change in production."
"I will propose to the king that if necessary I will be happy to convene a follow-up summit at heads-of-government level in London as a venue."

International Energy Agency -- Executive Director Nobuo Tanaka (will attend)
June 12, Paris, oil near $133: "These high prices are not sustainable and jeopardize economic growth globally. The impact is especially acute in developing countries."

"We would welcome an opportunity to act collectively to reassure the market about future demand and supply balances in order to change the perception of extended tightness."

AntiSpin: Why is oil pushing $140? It's supply! It's demand! It's the dollar! It's the speculators! It's peak oil!

We will not be holding our collective breath through the entire event awaiting a consensus among these competing interests.

Only by comparing deeds to words over time will the truth emerge.

Hat tip to member GRG55!

[GRG55]

Re: Oil producers and consumers to duke it out June 22

Oil producers and consumers meet on prices June 22

What if you held an oil sale...and nobody came? ;)

[Many SE Asian refiners are geared to produce bunker fuel for ocean shipping, and therefore have a preference for heavier crude inputs. Another sign of slowing global ocean-borne commerce?]

Asian refiners say "no thanks" to more Saudi oil

Mon Jun 16, 2008 9:20am EDT
By Maryelle Demongeot
SINGAPORE (Reuters) - Refiners across Asia said on Monday they were not likely to buy more Saudi crude at current prices, highlighting the kingdom's challenge in attempting to contain soaring markets by promising extra barrels.

The world's top exporter is set to increase output to 9.7 million barrels per day (bpd) in July, United Nations chief Ban Ki-moon said on Sunday, the first official indication of Saudi Arabia's second supply boost in as many months.

The extra 250,000 bpd would come on top of the 300,000 bpd it promised to pump this month, most of which appeared to head West as margins for simple refiners in Asia slumped to their deepest losses in over a decade.

"We've already made our plans, and barring something out of the ordinary, I don't foresee making any changes to them," a source with a Japanese lifter told Reuters.

Another lifter added: "We have no interest in extra barrels."
State oil firm Saudi Aramco has made clear to its Asian customers that they can have more crude if they want it. Just over half the kingdom's exports go to Asia.

But most Asian lifters declined offers of additional crude for lifting in July during the monthly allocation process that was concluded last week. Only one refiner took up the offer, buying 1 million barrels, an industry source told Reuters.

The issue appears to be about quality.

Saudi Aramco is only offering to sell extra volumes of its medium-heavy Arab Light and Arab Extra Light crudes, while refiners in this region would prefer a mix of its different grades, two sources familiar with the discussions said.

"It's not an issue of whether they offer extra barrels, but of whether they meet our request for an increase in the share of medium and heavy crudes," said a trading official with Sinopec, the biggest refiner in Asia and China's leading player.

"Our plants have become extremely choosy now that losses are getting bigger."

POOR MARGINS

Saudi Arabia is in the process of bringing online its 500,000-bpd Khursaniyah oilfield, that will produce Arab Light crude.

But price is also playing a part.

Although margins for processing the kingdom's heavier grades have plummeted, Aramco has also cut the discounts it offers on these grades to their lowest levels this decade, while keeping prices of its lighter grades at relatively high levels.

Refining margins for Middle East benchmark Dubai -- similar to Saudi flagship Arab Light -- run in a complex plant in Singapore rose above a $9 a barrel profit on Monday, and have averaged more than $7 since March, Reuters data show.

But margins on the same crude run in a simple refinery -- of which there are still many in China, India and Southeast Asia -- have been negative for the past month in a half.

"We may take more Saudi barrels depending on the terms they offer.

They should come out with some attractive terms like price cuts or a change in the formula," said a source with a state-owned refinery in India.

Though Asian refiners seem reluctant to take extra barrels above their monthly term volumes, several -- especially in China and India -- have ramped up imports of Middle Eastern crude on a yearly basis, making it less pressing to make monthly adjustments.

Data showed Saudi Arabia raising exports to North Asia in the first quarter by 200,000 bpd from the previous quarter, and by 300,000 bpd versus a year earlier, when it limited output in line with OPEC cuts.

Saudi Arabia is the only member of the Organization of the Petroleum Exporting Countries able to boost output quickly.

OPEC had repeatedly declined consumer nations' calls for more output, blaming it on speculation rather than a supply shortage, until prices jumped above $139 a barrel, prompting Saudi Arabia to offer to host an unprecedented meeting of producers and consumers to tackle market instability on June 22.

Asian buyers have been receiving mostly full contracted volumes since November after OPEC agreed to raise output in a bid to stem price rises.
http://www.reuters.com/article/GCA-O...19375720080616

[Slimprofits]

Re: Oil producers and consumers to duke it out June 22

Crude Oil Declines as China to Increase Fuel Prices Tomorrow

China, the second-biggest fuel consumer after the U.S., will increase gasoline and diesel prices by 1,000 yuan ($145.50) a ton, the National Development and Reform Commission said. The increases represent a 17 percent gain for gasoline and 18 percent for diesel. Gasoline, natural gas and heating oil also fell.

``The announcement of the Chinese fuel price increase sent the market sharply lower,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``This should have a big impact on demand.''

[..]

China will also raise jet-fuel prices by 1,500 yuan a ton, or 25 percent, tomorrow, the top policy planner said. On July 1, China will increase electricity prices by an average 0.025 yuan a kilowatt-hour, or 4.7 percent. China will impose temporary caps on thermo-coal prices until the end of this year.

The government is considering a so-called environmental tax, a new levy on auto fuels and changes to existing taxes on natural-resource use, Fu Jing, deputy director of policy and legislation at the State Administration of Taxation, said at the Energy Efficiency Asia conference in Beijing today.

[GRG55]

Re: Oil producers and consumers to duke it out June 22

Crude Oil Declines as China to Increase Fuel Prices Tomorrow

A few excerpts:

..."The question is now do they do something about it other than blame speculators? We're looking for more barrels instead of an invitation to Jeddah," said Adam Sieminksi, chief energy economist at Deutsche Bank...

..."Many people's supply-demand models for 2010 and beyond are out of balance," Sieminksi said. "The futures market is sending a message to the physical market. Either you slow demand and increase supply or prices are going to go a lot higher."...

..."Lots of taps won't be turned on after Jeddah," he said. "But we don't want it to be a talking shop. Something substantial has to come out of it."... [I predict a substantial luncheon for the participants. And no wine... :rolleyes:]

OPEC hike unlikely at Jeddah emergency oil talks

Fri Jun 20, 2008 3:27am EDT
By Simon Webb
JEDDAH, Saudi Arabia (Reuters) - Eight-cylinder luxury cars will rumble along Jeddah's highways guzzling cheap Saudi gasoline as energy powers hold emergency talks in the Red Sea port this weekend to brake the free-wheeling rise in oil prices.

Top exporter Saudi Arabia appears unlikely to orchestrate a hike in supplies from the Organization of the Petroleum Exporting Countries (OPEC), but the kingdom may formalize plans to raise its output to the fastest rate in decades.

Consumers and producers blame each other for the rally and failed even to agree the price was too high at a meeting two months ago in Rome when oil cost $120.

Riyadh summoned both sides and chief executives from big oil firms to meet on Sunday after an unprecedented day of trading sent a shock through the market on June 6. U.S. oil rose nearly $11 a barrel to a new peak in its largest ever one-day rise.

The price has more than doubled in a year to nearly $140 a barrel, sparking protests from Brussels to Bangkok over record fuel costs that threaten the world's economy.

Saudi King Abdullah told UN Secretary General Ban Ki-moon last Sunday that the kingdom would do everything it can to bring "abnormally high" oil prices to "adequate levels."

The market is waiting to see what that means.

"The question is now do they do something about it other than blame speculators? We're looking for more barrels instead of an invitation to Jeddah," said Adam Sieminksi, chief energy economist at Deutsche Bank.

Oil Minister Ali al-Naimi told Ban that Saudi Arabia would raise oil output to 9.7 million barrels per day in July, its second output rise in two months and the highest Saudi output since August 1981, according to U.S. statistics.

Consuming nations such as Britain want more from OPEC, the source of over a third of the world's oil. But the world's largest consumer the United States said that it expects no announcements on increased oil output from Jeddah.

OPEC hawks Iran and Venezuela say they have no plans to review output levels until the group next meets in September. Venezuela is snubbing the Jeddah meeting.

Officials from the producer group say oil supplies are adequate and blame the high price on warmongering over Iran's nuclear program, massive investment flows into commodities and the slump in the U.S. dollar.

"I don't think increasing any amount in the international market will have a significant impact on the prices," Iraq's Oil Minister Hussein al-Shahristani told Reuters this week.

SPARE CAPACITY
There is little that most other producers can do for supply as Saudi Arabia holds most of the world's spare capacity.

Limited extra capacity and the potential for demand to outstrip supply in years to come have helped drive oil's rally.

Investors expect oil consumption in China, the Middle East and other emerging economies to more than outweigh slower consumption from the West while additional supply from countries outside OPEC has been slow to materialize. Supply is falling rapidly in mature producers such as Britain and Mexico.

"Many people's supply-demand models for 2010 and beyond are out of balance," Sieminksi said. "The futures market is sending a message to the physical market. Either you slow demand and increase supply or prices are going to go a lot higher."

Saudi Arabia, holder of over a fifth of the world's oil reserves, has yet to mobilize to boost capacity further beyond a program due to conclude next year to lift output potential to 12.5 million bpd.

Longer-term capacity commitments from Saudi and other producers might help, Sieminksi said.

Other big producers both within and without OPEC have struggled to map future increases. Sanctions have constrained international investment in Iran, the second-largest oil reserve holder. Violence and politics have held back output from the next largest reserve holder, Iraq.

Subsidies may be on the Jeddah agenda. So will speculation. OPEC blames speculators for inflating oil's rally and adding to volatility and wants increased regulation of futures markets.

Investment funds have pumped billions of dollars into oil markets as they look to diversify holdings and flee other poorly performing asset classes. "How do you divide investment from speculation?" said a senior trader at a major western oil company. "We're all in it to make money."

U.S. regulator the CFTC, under pressure from lawmakers, has announced a task force to explore commodity activity. It also announced a deal this week with its British counterpart to limit trading on oil futures on London's ICE exchange.

Oil market observers question whether very much can be done in Jeddah in the short-term to bring oil down.

British Energy Minister Malcolm Wicks said he wanted consumers and producers to at least agree on what was causing higher prices. That would facilitate a longer-term plan to address the price and future energy use.

"Lots of taps won't be turned on after Jeddah," he said. "But we don't want it to be a talking shop. Something substantial has to come out of it."

[GRG55]

Re: Oil producers and consumers to duke it out June 22

A few excerpts:

..."The question is now do they do something about it other than blame speculators? We're looking for more barrels instead of an invitation to Jeddah," said Adam Sieminksi, chief energy economist at Deutsche Bank...

..."Many people's supply-demand models for 2010 and beyond are out of balance," Sieminksi said. "The futures market is sending a message to the physical market. Either you slow demand and increase supply or prices are going to go a lot higher."...

..."Lots of taps won't be turned on after Jeddah," he said. "But we don't want it to be a talking shop. Something substantial has to come out of it."... [I predict a substantial luncheon for the participants. And no wine... :rolleyes:]

OPEC hike unlikely at Jeddah emergency oil talks...

Well that didn't last long did it?
Time for another friendly chat with OPEC over lunch?

Crude Oil Rises on Lower Dollar, Libyan Threat to Cut Output

By Mark Shenk
June 26 (Bloomberg) -- Crude oil jumped more than $3 a barrel as the dollar weakened, Libya threatened to cut production and OPEC's president said prices may reach $170 by the summer.

The head of Libya's national oil company said the country may curb output because of oversupply. OPEC's president, Chakib Khelil, said a European interest-rate rise may send oil surging, France 24 reported. Oil doubled over the past year as the dollar dropped. The currency weakened today after the Federal Reserve gave no signal of higher interest rates yesterday...
http://www.bloomberg.com/apps/news?p...jyc&refer=home