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  1. #16
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    Global Executive Summary: Is the World Economy Immune to High Oil Prices?
    by Nariman Behravesh

    One of the biggest (and most pleasant) surprises in the past two years has been the ability of the U.S. and global economies to absorb the huge rise in energy prices without much pain. Many explanations have been offered for this resilience. The following are some of the most compelling.

    First, the rise in oil prices has been primarily demand-driven. In contrast, past spikes in oil prices price were geopolitical in nature and were the result of large supply disruptions (embargo, revolution, and wars). Today, oil prices are behaving like other commodity prices—with pro-cyclical moves.

    Second, oil export revenues are being recycled much more quickly through investments and financial flows. This recycling of OPEC trade surpluses has contributed to low interest rates and explains (in part) both the bond market "conundrum" highlighted by Fed chairman Alan Greenspan and the "savings glut" hypothesis put forth by CEA chairman (and former Fed governor) Ben Bernanke.

    Third, there is an absence of global inflationary pressures, reflecting ample manufacturing capacity and heightened global competition (e.g., from China). The inability of airlines to raise prices in step with rising energy costs is also a vivid example of why domestic service industries are under intense competitive pressures.

    Fourth, as a result of prudent monetary policies, inflation expectations are relatively stable now, compared with prior oil shocks. Thus, the wage-price spirals that followed earlier oil price shocks are no longer operative.

    Finally, not only are most industrial economies less energy dependent (more energy efficient) than 30 years ago, but even at current elevated levels, adjusted for inflation, energy prices are still not at their early-1980s peaks.

    How much higher could energy prices go? Thanks to the greater immunity to spikes in the price of oil and other energy sources, Global Insight expects that U.S. growth will be close to trend next year—and above it during the first half of 2006. We also expect that Chinese growth (and energy demand) will remain robust. Thus, the demand conditions in energy markets are unlikely to ease much in the coming year, leaving markets tight and prices vulnerable to all types of disruptions.


  2. #17
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    quote:Originally posted by bermuda

    3.The Jack oil find in effect proves "Peak Oil. why else would you spend millions developing a 5 mile deep offshore field unless there was an underlying problem.? Remember this field is only economic at $US40/bbl plus.
    Coal liquification becomes economic at $40/bbl too. That is why Peak Oil is a myth. If oil ever runs out or becomes too expensive to extract then there is enough coal to in the ground to provide liquid fuels for hundreds of years.

    SEC

  3. #18
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    Have to agree with Bermuda "Will be interesting to see where it bottoms.My pick is $US 56/bbl"

    But, in this mad world, anything can happen. Interesting days a head, but I will sleep well tonight, no gold or oil shares left, only cash in the bank, maybe a few bargins out there to plunder soon [?][?]

    Oil dips under $66 on improved supply picture

    Mon Sep 11, 2006 4:13am ET
    Business News
    HP board to reconvene late Monday
    Vodafone to enter fixed-line broadband market
    U.S. committed to reviving world trade talks: USTR
    VIDEO: Oil prices slide below 66 dollars
    More Business News... Email This Article | Print This Article | Reprints [-] Text [+] By Neil Chatterjee

    SINGAPORE (Reuters) - Oil prices dipped under $66 on Monday on a more comfortable supply picture, underlined by growing U.S. inventories and expectations that OPEC will keep production steady at high rates this year.

    U.S. light crude for October delivery fell 19 cents to $66.06 a barrel by 0757 GMT, after hitting a new five-month low of $65.68. It had plunged $1.07 on Friday and lost more than 4 percent last week.

    London Brent crude eased 15 cents to $65.18.


    Prices continued a slide from Friday after the potential early recovery of output from BP's giant Alaskan oil field and inventory data last week showing rising U.S. fuel stockpiles.

    Traders are now watching for a decision on crude production from OPEC, which meets at 0900 GMT on Monday in Vienna, with ministers saying they were unlikely to change a high output policy that is helping push prices lower.

    OPEC will consider a recommendation from its advisory committee that it keeps a current production ceiling unchanged at 28 million barrels per day (bpd), but leaves the door open to another meeting before December if prices drop sharply.

    "We'll look at a little bit more than simply rolling over," said OPEC President Edmund Daukoru on Monday.

    For over a year OPEC has been pumping at or near its fastest rate for 25 years. But forecasts that demand for OPEC oil will decline in 2007 are beginning to worry some in the group that pumps a third of the world's oil.
    Output from OPEC member Iraq is on the rise and currently 2.3-2.4 million bpd amid tighter security along its northern export pipeline, Iraqi Oil Minister Hussain al-Shahristani said in Vienna on Monday.

    Expected U.S. output was also given a fillip on Friday after BP said it believes the downstream segment of the shut oil transit pipeline on the eastern side of the Prudhoe Bay field in Alaska is in good enough condition to be restarted.

    BP shut down half of the 400,000 barrels per day Prudhoe Bay oil field, the biggest field in North America, in August after an inspection revealed serious corrosion. BP executives said on Thursday the entire field should restart by the end of October.

    "U.S. supply is comfortable and demand is about to enter a comparative lull. The Iran premium is dwindling too as the negotiations between Iran and the U.N. drag on," said Tobin Gorey of the Commonwealth Bank of Australia.


    SLOW PROCESS

    Iran's chief nuclear negotiator Ali Larijani offered a two--month suspension of Tehran's nuclear enrichment program in weekend talks with EU foreign policy chief Javier Solana, an EU diplomat said on Sunday.

    But it was unclear if Iran would meet the Western demand it suspend enrichment before the start of any talks on trade incentives aimed at ending the nuclear stand-off. An Iranian official denied Tehran had offered any freeze on enrichment.

    Expectations of a long delay before any possible sanctions eased worries that Iran could retaliate by disrupting oil flows, while a milder-than-forecast Gulf of Mexico hurricane season so far has also weakened U.S. prices from a record $78.40 in July.

    Hurricane Florence, the second of the 2006 Atlantic season, headed toward Bermuda and away from the North American mainland, where hurricanes battered oil producti

  4. #19
    Senior Member Halebop's Avatar
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    quote:Originally posted by KW

    Usually when everyone is using terms like "crashing", "sky is falling", "end of the boom" - it means its a good time to buy :-)
    ...unless in fact, the market is crashing, then it's a good time to sell.

  5. #20
    FEAR n GREED JBmurc's Avatar
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    My pick 64-68 range in the very short term , longer term much higher sub $50 Not likley




    Has oil production finally peaked?

    Are we ready for Peak Oil?
    With the demand for energy around the world ever increasing, are we edging closer to "peak oil" - and what can be done about it?

    Stephen Leeb, founder of Leeb Capital Management Group and a long-time analyst on Wall Street, thinks so.

    "We have a president that says we're addicted to oil, but doesn't say that we don't have enough oil to satisfy our addiction," he says. "He really hasn't alerted us to the fact that it's a true crisis."


    The crisis anticipated by these so-called petro-pessimists is one in which the world returns to the dark ages. At its most gloomy, the picture is one of civil unrest, world wars, and people dying of hypothermia in winter.

    But then there are the oil-optimists - who believe we are entering the golden age of oil when higher prices and new innovations will see breakthroughs in recovery and discovery of oil.

    Going deeper

    At the forefront of this hunt for fresh oilfields are people like the scientists at Shell's Exploration and Production Centre in Houston.

    They are developing new technologies such as electromagnetic waves to peer through rock and silt for precious reserves of oil thousands of feet below the sea bed.

    Geophysicist Rocky Detomo's job is quite simple: to tackle the technologically impossible.

    We don't go (to deep water) because we want to - we go there because it's the last place on earth where the elephants live

    Roger Anderson, Columbia University

    "We're looking deeper, we're looking in deeper water, we're looking at deeper depth, we're looking in countries we have never looked before, environments that are very hard to get to," he says.

    "We have to bring all the technology we can to bear to be successful."

    But haven't all the "elephant fields" - the big ones, which can pump for decades - been discovered?

    Mr Detomo says they are still out there. But the quality of the oil, or difficulties in extracting it, can cause problems.

    "The technology of today and tomorrow can look better and better at the opportunities," he says. "So far there's no limit on finding oil. The technologies can keep up with finding it, but it gets more and more difficult."

    Fresh options

    His colleague, Lance Cook, is working on so-called "tubular expandables" to counter some of the problems of drilling at great depth.

    Traditional wells get narrower as each the lowest sections are added through the existing well in a telescoping effect. His team has developed what they call a "secret formula" to create a metal which expands once it is in place.

    The idea is that this kind of drilling could enable much more oil to be retrieved from depths of 8-10,000 feet - "like microsurgery", he says.

    Another option, one being trialled in the Na Kika project in the Gulf of Mexico, links a number of small fields together, each of which - because they are too deep, too far offshore or too dispersed - would not be viable individually.


    The search for oil is going ever deeper

    And then there are submarines.

    Roger Anderson, of Columbia University in New York, is working on fitting drills equipped with seismic imaging to submersibles, which could drill miles underground with gyroscopes to orientate themselves towards "the jackpot".

    Oil would not need to be brought to the surface - but would be taken straight to shore through pipes across the sea bed.

    "The reason we're in ultra-deep water is that that's the last frontier," says Mr Anderson.

    "We don't go there because we want to. We go there because it's the last place on earth where the elephants live."

    Predictions

    Given all the potential advances, petroleum geologist William Fisher from the University of Texas believes we have a long time to go before any kind of peak emerges.

    "Peak oil's been predicted a number of times over the years, and it continually moves forward," he says.

    "Even peop
    People don't have ideas, ideas have people

  6. #21
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    Crude Oil Falls Below $64 on Forecast for Lower Global Demand

    ``We're in the midst of a tectonic change,''

    ``There's a lot of extra supply, which suggests that demand isn't growing as quickly as before.''

    ``Barring action in the Security Council or a hurricane in the Gulf, prices could head to $50,''


    Do or do not. There is no try. ~ Yoda

  7. #22
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    quote:Originally posted by cantab
    I rate Peak oil in the same category as predicted collapse of the USA economy and paper money. Haven't heard that one for a while.
    Difficult to argue with the fact that some people are alarmist about these things and their dire predictions are unlikely to lead to immediate economic colapse.

    But that's not to say that there aren't underlying truths in the theories either.

    What I think with Peak Oil is that it almost certainly will become over time more costly to get at that Oil. I have faith in peoples ability to extract previously unextractable oil, but don't think they'll be finding any close to the surface easy to extract fields again. And demand is certainly not about to die away.

    As for the US economy, IMO a gradual deflation rather than a collapse, have seen plenty of evidence that in 10-20 years China and India will catch up economically and hard to rationalise the massive deficits the US run as a "good thing".

  8. #23
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    quote:Originally posted by Seti

    Crude Oil Falls Below $64 on Forecast for Lower Global Demand

    ``We're in the midst of a tectonic change,''

    ``There's a lot of extra supply, which suggests that demand isn't growing as quickly as before.''

    ``Barring action in the Security Council or a hurricane in the Gulf, prices could head to $50,''
    Interesting headline, but largely the actual article doesn't indicate Lower Demand, rather their forecast was wrong and they are lowering it.

    Only bit about lower demand is
    quote:`The rally that's lasted almost five years may be over. We keep seeing lower demand estimates which show the impact of very high prices.'
    Possibly true but if estimates were historical (as they usually are) based on the prices of a month ago, the markey has already reduced prices and demand will go back up.

    Important sentence not highlighted
    quote:`OPEC, which supplies 40 percent of the world's oil, agreed at yesterday's meeting to keep its output target unchanged at 28 million barrels a day. Qatar's oil minister Abdullah bin Hamad al-Attiyah said yesterday that the group may consider cutting output at its next meeting in December if prices fall.
    My understanding is that from reports OPEC will consider cutting output once price gets below $60, it's irrelevant to have greater supply capability if OPEC decide to tun it off.

  9. #24
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    quote:Originally posted by cantab

    I rate Peak oil in the same category as predicted collapse of the USA economy and paper money. Haven't heard that one for a while.
    hear hear...but you'll still see Stolwyk and GB holding hands in their white frocks on a corner near you with their "US economy End is nigh" signs around the necks.

    The doomers have gone awfully quiet again..it's deafening

    hmm, where has GB gone (end of paper money preacher)

  10. #25
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    Isnt it amazing.Only a couple of years ago Opec were saying that they wanted the oil price at about the $US25-28/bbl.Now they want $US60!!!

    Why is this ? possibly due to one or more of the following factors

    1.The world hasn't fallen over at $US60 so why not milk it for all its worth

    2.When you look at the inherent energy value and compare it against others then $US60 is cheap

    3.Some Opec populations are exploding and their per capita wealth is decreasing.Hard to believe but true.

    4.Some Opec countries are having to spend billions just to keep their production levels from declining.Saudi Arabia a case in point.

    5.Over two thirds of the producing countries are in decline and now realise that this is their last shot to 'save' for the future.Kuwait is a good example.Their biggest asset the Burgan field is in decline and their oil Ministry is very concerned about future sustainable revenues.They are actively pushing to reduce production and save their oil for tomorrow.
    Yes this simple truth had to come out sooner or later.And dont be surprised if more countries follow suite.

    And of course the incremental barrel need more than $40/bbl to be economic.

    Oil prices will be very volatile.As it goes down the Peak Oil sceptics will be all over the media claiming there are huge reserves.The reduction in price will keep the economy bubbling but the day of reckoning will unfortunately be masked.

  11. #26
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    Gotta love the statement from Macquarie:

    Macquarie Cuts Resources Exposure

    Tuesday, September 12, 2006 11:10:02 PM ET
    Dow Jones Newswires



    1156 [Dow Jones] STOCK CALL: Citing an inverted U.S. yield curve after long-term bond yields fall over last quarter as historically reliable leading indicator of an economic downturn, Macquarie Equities reduces exposure to resource stocks by removing Rio Tinto (RIO.AU) from its recommended portfolio and downweighting Woodside Petroleum (WPL.AU). Recommends staying "very overweight" banks property trust sector for capital preservation, recommends CFS Retail Property Trust (CFX.AU) and also increased exposure to infrastructure via Sydney Roads Group (SRG.AU).


    Or, put another way:

    We'll find any excuse to jump on the Stephen Roach "I'm calling the commodities boom over" bandwagon, so ditch all your overperforming resources stocks to buy our underperforming listed funds so we can start extracting enormous fees from them again.

  12. #27
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    Spot on Sec - "We'll find any excuse to jump on the Stephen Roach "I'm calling the commodities boom over" bandwagon, so ditch all your overperforming resources stocks to buy our underperforming listed funds so we can start extracting enormous fees from them again."

    Live Spot Prices

    SPOT MARKET IS OPEN
    closes in 58 hrs. 51 mins.
    change since 19:00 London Time
    Price: US$/lb


    Copper September 13,07:24
    Bid/Ask 3.4142 - 3.4233
    Change +0.0030 +0.09%
    Low/High 3.3590 - 3.4527
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    Ux U308 price: 52.00
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    London Metal Exchange Warehouse Stocks(Aug 25)
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    Aluminum 711625 -1825
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  13. #28
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    The day of reckoning, by Bermuda - "Oil prices will be very volatile.As it goes down the Peak Oil sceptics will be all over the media claiming there are huge reserves.The reduction in price will keep the economy bubbling but the day of reckoning will unfortunately be masked."


    It must be fairly safe to be getting back into oil, with this major correction, spot the bargains!

    Yes volatile

    Who is the bargain oiler as from today [?][?][?]

  14. #29
    FEAR n GREED JBmurc's Avatar
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    So many Bargins so little spare fundsmy picks at current SPs
    Low Risk-ROC,WPL,STO,NZO,OSH
    higher risk-STX,GOG,ADI,ARQ,TAP -to name my favourites
    (Heard some inside imfo on NZO sound very good)

    Many analysts declared the end of the oil bull market this week. Well, isn’t that wonderful? All we have to do in order to avoid ‘PEAK-OIL’ is to throw some derivatives at the market, painting the tape into a ‘bear-market’ and voila, problem solved! Again, it goes far beyond the scope in order to explain why oil-prices aren’t likely to come down coming years but readers interested can take a peek at the Gold & Oil chapter of the Gold Drivers Report. Even if oil prices were to stay flat from here on (what I don’t believe), still then the price of gold should be around $1000 according to the historical Gold/Oil average.. Please take a peak at Gold & Historical Norm for further explanation
    People don't have ideas, ideas have people

  15. #30
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    PPP, BOW, ICN, HZN will do well (no pun intended)over next 12 months.
    If NEO gets fraccing could raise some eyebrows... and spirits (again no punintended)
    Cheers
    JK
    Discl. hold all.

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