Oil markets are oversupplied

[RichardE]

Algeria sees OPEC keeping output steady

ALGIERS: OPEC is likely to maintain oil output at current levels when it meets at the end of the month because the market is well supplied, Algeria?s Energy and Mines Minister Chakib Kehlil said on Saturday.

"We think that we will keep production at the same level," Kehlil told a news conference at an economic forum, adding that the cartel remained ready to fill any supply gaps. "We will make every effort to ensure stability," he said. "There is enough oil on the market."

He said high oil prices were having no impact on economic growth and he expected the global economy to grow by around 4.3 percent this year.

The Organisation of the Petroleum Exporting Countries meets on January 31 in Vienna to decide output policy. World oil prices climbed back above $67 a barrel on Friday, driven higher by worries over Iran and disruption to supplies in Nigeria. "We prefer a price of $50 a barrel for a prolonged period," Kehlil said.

He said Algeria was currently pumping 1.4 million barrels of oil per day (bpd) and that world demand for crude oil was expected to grow this year by 1.6 million bpd.

Despite assurances from key producer Saudi Arabia that OPEC will keep output unchanged, Iran has made the case for a cut, arguing that the market is oversupplied.

Some OPEC observers have claimed this could herald political manoeuvring and a breakdown in OPEC unity.

Algeria is one of the smaller members of OPEC but has big ambitions to produce more oil.

Kehlil said the government planned to hold its seventh oil and gas exploration tender for foreign oil companies by the end of the year.

http://jang.com.pk/thenews/jan2006-daily/29-01-2006/business/b5.htm


So, if oil markets are oversupplied, why are we paying so much?

 

[bctbct]

So oil companies can boost profits over the last quarter?

 

[EatSpam]

Originally posted by: bctbct
So oil companies can boost profits over the last quarter?

and the Executive teams need new yachts and mansions. /thread

 

[CSMR]

Originally posted by: bctbct
So oil companies can boost profits over the last quarter?

what an ignorant comment

 

[CSMR]

Originally posted by: RichardE
So, if oil markets are oversupplied, why are we paying so much?

Oil can supply the current market, but demand will increase, and eventually supplies will fall. If oil were cheaper now, it would make sense for private companies to stockpile a lot of it to profit in the future. That explains why it isn't cheaper.

 

[bctbct]

Originally posted by: CSMR

Originally posted by: RichardE
So, if oil markets are oversupplied, why are we paying so much?

Oil can supply the current market, but demand will increase, and eventually supplies will fall. If oil were cheaper now, it would make sense for private companies to stockpile a lot of it to profit in the future. That explains why it isn't cheaper.

Really, and oil companies do not make more money?

 

[CSMR]

Originally posted by: bctbct

Originally posted by: CSMR

Originally posted by: RichardE
So, if oil markets are oversupplied, why are we paying so much?

Oil can supply the current market, but demand will increase, and eventually supplies will fall. If oil were cheaper now, it would make sense for private companies to stockpile a lot of it to profit in the future. That explains why it isn't cheaper.

Really, and oil companies do not make more money?

More than what?

 

[themusgrat]

Originally posted by: CSMR

Originally posted by: RichardE
So, if oil markets are oversupplied, why are we paying so much?

Oil can supply the current market, but demand will increase, and eventually supplies will fall. If oil were cheaper now, it would make sense for private companies to stockpile a lot of it to profit in the future. That explains why it isn't cheaper.

Exactly. They want to make sure they get their money. Or did the other post already say that?
:disgust:

EDIT: I see how that is not the only reason, but get real. If they don't need to charge this much, why are they?

 

[Engineer]

Originally posted by: CSMR

Originally posted by: RichardE
So, if oil markets are oversupplied, why are we paying so much?

Oil can supply the current market, but demand will increase, and eventually supplies will fall. If oil were cheaper now, it would make sense for private companies to stockpile a lot of it to profit in the future. That explains why it isn't cheaper.

So oil supplies, as of late December, were up 13% worldwide and price was up 45% (from 1 year ago levels). Sounds like irrational exuberance on part of the traders and gouging on behalf of the oil companies.

 

[tweakmm]

Originally posted by: CSMR

Originally posted by: bctbct

Originally posted by: CSMR

Originally posted by: RichardE
So, if oil markets are oversupplied, why are we paying so much?

Oil can supply the current market, but demand will increase, and eventually supplies will fall. If oil were cheaper now, it would make sense for private companies to stockpile a lot of it to profit in the future. That explains why it isn't cheaper.

Really, and oil companies do not make more money?

More than what?

Than God.

Oh wait, they make exactly the same amount.

 

[judasmachine]

Originally posted by: bctbct
So oil companies can boost profits over the last quarter?

The wrote the corporate bylaws, and charters, and such so as to excuse anything deviation from decency, or logic, in the ravenous pursuit of profit. They are bound by these laws to do anything and everything for profit. To do anything else would get them fired.

 

[Whaspe]

Oil is a commodity subject to market forces. It has a high price because people will buy it at that price. Probably, insecurity and speculation has a large part in determining it. Anyone with a brain can figure this out and profit from it if they chose. That's the power of a free market economy.

 

[CSMR]

Originally posted by: Engineer

Originally posted by: CSMR

Originally posted by: RichardE
So, if oil markets are oversupplied, why are we paying so much?

Oil can supply the current market, but demand will increase, and eventually supplies will fall. If oil were cheaper now, it would make sense for private companies to stockpile a lot of it to profit in the future. That explains why it isn't cheaper.

So oil supplies, as of late December, were up 13% worldwide and price was up 45% (from 1 year ago levels). Sounds like irrational exuberance on part of the traders and gouging on behalf of the oil companies.

What do oil companies have to do with oil prices? One they take the oil out of the ground and decide to sell it, they take the market price. Oil demand is evidently not very responsive to price. And you have to determine supply and demand functions in the future which are the main factor in oil prices. And even if a 13% present rise is the only change and everything else is known to stay the same, if 13% is less than the expected rise in oil supply the price will go up. But if you still trust yourself, sell short oil futures and make some money; however consider things more carefully first.

 

[CSMR]

Originally posted by: Whaspe
Oil is a commodity subject to market forces. It has a high price because people will buy it at that price. Probably, insecurity and speculation has a large part in determining it. Anyone with a brain can figure this out and profit from it if they chose. That's the power of a free market economy.

Yes!

 

[CSMR]

Originally posted by: judasmachine

Originally posted by: bctbct
So oil companies can boost profits over the last quarter?

The wrote the corporate bylaws, and charters, and such so as to excuse anything deviation from decency, or logic, in the ravenous pursuit of profit. They are bound by these laws to do anything and everything for profit. To do anything else would get them fired.

You are right, if anyone in an oil company decided to the companies oil lower than the market price he would be fired. And if he decided to sell it above the market price he would not sell any and be fired. These rather minimal conditions on firm behaviour lead to supply and demand being the determinants of price.

 

[bctbct]

When supply is high, prices are high

When supply is low, prices are higher

Oil companies are boosting record high profits from record high mark-up.

Higher mark-up....higher prices.

Not a free market, scam

 

[JS80]

Speculating futures traders who never take delivery on the contracts.

 

[zephyrprime]

Originally posted by: CSMR

Originally posted by: RichardE
So, if oil markets are oversupplied, why are we paying so much?

Oil can supply the current market, but demand will increase, and eventually supplies will fall. If oil were cheaper now, it would make sense for private companies to stockpile a lot of it to profit in the future. That explains why it isn't cheaper.

Name me a single private company that was stockpiling oil in big tanks while oil prices were low to resell it when prices were high.

Oil prices now are the result of a conspiracy by oil companies to raise prices like Enron managed to do with electricty prices. I believe that before the Iraqi war, oil companies were afraid that a big increase in oil output from Iraq would decrease oil prices and hence got together and conspired to fix oil futures trading. The oil from Iraq never materialized so now prices are sky high. The oil companies are now milking it for all its worth.

Now some of the posters on this thread keep saying that "oil is a commodity and its price is determined by supply and demand". Don't you guys get it? The whole point of articles like the OP posted is that oil prices are not behaving to supply and demand dynamics! OIL SUPPLIES ARE UP & PRICES ARE UP! That shouldn't be possible if a free market were in play.

 

[Pabster]

What is so hard for you to understand?

There is a gluttony of crude oil. Big deal. Can you take that raw crude and fill your tank with it?

The forces of the extreme left in this country (environmentalists, NIMBY-types, et al) have prevented us from reaching the necessary refining capacity to take all that oil and make finished products from it.

I know it is easy to just blame it all on greedy "Big Oil" but nothing could be further from the truth.

 

[ntdz]

Originally posted by: RichardE

So, if oil markets are oversupplied, why are we paying so much?

Because the market isn't oversuppled.

 

[Engineer]

Originally posted by: ntdz

Originally posted by: RichardE

So, if oil markets are oversupplied, why are we paying so much?

Because the market isn't oversuppled.

Apparantely OPEC is leaning that way as they are considering cutting 2 million barrels per day from the supply chain.

Pabster...nobody said anything about gasoline prices. The question is why is crude so high, not gasoline.

The real loser is going to be the US economy as energy prices take more and more of the consumer dollars. Consumers went negative last year in savings (spent more than made) for the entire year for the first time since 1933. Energy prices took most of the extra money they spent. Just look at 4th quarter GDP numbers. More than likely, it will continue to get worse.

 

[Meuge]

Originally posted by: Engineer

Originally posted by: ntdz

Originally posted by: RichardE

So, if oil markets are oversupplied, why are we paying so much?

Because the market isn't oversuppled.

Apparantely OPEC is leaning that way as they are considering cutting 2 million barrels per day from the supply chain.

Pabster...nobody said anything about gasoline prices. The question is why is crude so high, not gasoline.

The real loser is going to be the US economy as energy prices take more and more of the consumer dollars. Consumers went negative last year in savings (spent more than made) for the entire year for the first time since 1933. Energy prices took most of the extra money they spent. Just look at 4th quarter GDP numbers. More than likely, it will continue to get worse.

Actually, much of the blame can be put on Russia. Being in the top 3 oil exporters in the world, and probably the #1 gas exporter in the world, it's in Russia's vested interest to keep prices high, until they can get their economy off the ground. Currently there are only 2 highly profitable industries in Russia -> energy and military... and I think we all agree that we'd rather they sold oil, then SU-37s.

 

[Slew Foot]

If they can get the price then they should be able to sell it for that price. None of you are complaining that your house appreciated 50% in the last 2 years.

 

[Engineer]

Originally posted by: Slew Foot
If they can get the price then they should be able to sell it for that price. None of you are complaining that your house appreciated 50% in the last 2 years.

Everyone's home didn't appreciated 50% in the last two years and the people that are buying them are complaining. I have every right to complain if something that I need rises in price, thank you very little.

 

[CSMR]

Originally posted by: zephyrprime

Originally posted by: CSMR
Oil can supply the current market, but demand will increase, and eventually supplies will fall. If oil were cheaper now, it would make sense for private companies to stockpile a lot of it to profit in the future. That explains why it isn't cheaper.

Name me a single private company that was stockpiling oil in big tanks while oil prices were low to resell it when prices were high.

I do not know if any company does to a huge extent. My argument was that IF current prices were low in relation to expected future prices then companies would want to stockpile oil. (And suppliers would not want to supply as much now.) Thus future high prices explain current high prices.
Now you can go back and understand my comments and Whaspe's comment.

Oil prices now are the result of a conspiracy by oil companies to raise prices like Enron managed to do with electricty prices. I believe that before the Iraqi war, oil companies were afraid that a big increase in oil output from Iraq would decrease oil prices and hence got together and conspired to fix oil futures trading. The oil from Iraq never materialized so now prices are sky high. The oil companies are now milking it for all its worth.

There can certainly be collusion in oil markets, e.g. OPEC. If you say that oil companies are involved by all means argue that. What companies can't do is raise prices without at the same time decreasing supply. For a fixed supply companies have no control over price; demand is the only relevant thing.