As we are now seeing an ‘echo’ of the huge spike in oil prices that in my view precipitated a US recession as much as the implosion of the credit markets, it’s worth revisiting the 2008 bubble in energy prices. emstrongThe historic oil price shock of 2005-8 was triggered not by a supply interruption like that of the 1970’s but simply by stagnating supply in the face of soaring demand, reducing the daily supply cushion to uncomfortably low levels at 1-1.5m b/d (now up to 5m plus) and magnifying the potential impact of any threatened supply disruption/strong/em , be it from Nigerian militants or a Gulf Hurricane. The impact on prices was exacerbated by a speculative mania that gripped the poorly regulated and opaque energy markets from late 2007, creating a parabolic blow-off move to the $147 high last July. Crucial to this whole destabilizing episode was the role of …

In the energy market on Friday, the price of oil drifted lower, with crude for April delivery closing at $46.25/barrel, down 78 cents. April reformulated gasoline rose three-quarters of a cent, to $1.3529/gallon.

Traders reacted to the possibility that OPEC may not cut production when it meets in Vienna on Sunday.

President Obama is reported to have been jawboning King Abdullah of Saudi Arabia, and Energy Secretary Steven Chu warned OPEC that if it cuts production, it could severely hamper attempts at economic recovery.

“They are trying to convey to OPEC that it is time they did their part to help speed the global economic recovery,” said Phil Flynn, of Alaron Trading.

James Williams, of WTRG Economics, says that there are several factors suggesting that OPEC will leave quotas unchanged this time: The Saudis have cut a disproportionate amount and will most likely push for others to come into line before agreeing to

...

New GCC single currency agreed, will it include gold?

Filed under: Gold & Silver, Inflation, Oil Prices, UAE Revaluation, UAE Stocks, US Bonds, US Dollar — peterjcooper @ 8:56 am

Gulf Cooperation Council leaders yesterday concluded their 29th annual summit meeting in Muscat, Oman with a final approval for the creation of a single currency for the six-nation economic bloc, still targeted for 2010.

Saudi Arabia is the largest economy in the GCC and boasts substantial gold reserves. But whether gold will be included in the currency basket has not yet been decided. Golden opportunity

GCC assistant secretary-general Mohammad Al Mazroui told Gulf News: ‘We first have to decide on the location of the Central Bank, then the Central Bank and Monetary Council will have to decide on the gold reserves for the Central Bank’.

The creation of the GCC single currency - likely to be known as the Khaleeji which means Gulf in Arabic

...

It was cloudy in the Algerian city of Oran on Wednesday…and a fairly pleasant 14 degrees in the open air… But the assembled leaders of the OPEC oil exporters’ cartel must have been feeling rather hot under the collar. Since hitting a peak of $147 in July this year, the price of oil has fallen by about $100. That has put the oil exporting countries under a huge amount of pressure. And now they are determined to drive the price of oil back up again.

Global oil production is set to fall sharply

On Wednesday, the cartel announced that it will slash daily oil production by 2.46 million barrels a day. That’s OPEC’s biggest production cut ever. What’s even more extraordinary is that some of the big the non-OPEC producers are now coordinating their production cuts with the cartel.

The Russians attended the OPEC meeting and they may cut announce their own

...

nbsp;Here's what I am reading today ...brbrASIAbrbrA class=summheadline href=http://www.bloomberg.com/apps/news?pid=20601087sid=auPaBwMwwGtgamp;refer=worldwideSTRONGJapanese Business Confidence Plunges Most in 34 Years as Recession Deepens /STRONG/ASentiment among Japan’s largest manufacturers fell the most in 34 years, signaling companies are likely to cancel spending plans and cut more jobs, pushing the economy further into recession. brbrA class=summheadline href=http://www.bloomberg.com/apps/news?pid=20601089amp;sid=ablWg2RUlVmkamp;refer=chinaSTRONGChina Plans to Increase Money Supply in 2009 to Boost Domestic Consumption /STRONG/AChina aims to increase its money supply 17 percent in 2009 and encourage lending to boost domestic consumption and buoy growth in the world’s fourth-largest economy. brbrENERGYbrA class=summheadline href=http://www.bloomberg.com/apps/news?pid=20601072amp;sid=aXp2Rc3B4FSEamp;refer=energySTRONGCrude Oil Rises as OPEC's El-Badri Says Sizeable Cut Is Needed at Meeting /STRONG/ACrude oil rose, touching $50 a barrel in New York, after OPEC’s Secretary-General Abdalla El-Badri said the group needs to make a “sizable” output cut at this week’s meeting in Algeria. brbrA href=http://www.bloomberg.com/apps/news?pid=20601072amp;sid=auG5o.dtUTXMamp;refer=energySTRONGOPEC Collides With Goldman Over $75 Oil in First Demand Decline Since 1983 /STRONG/AThe Organization ...

Arab stock markets closed ahead of a week-long holiday marking Eid al-Adha in a relatively calm mood. br /br /Saudi shares trimmed losses, mainly in response to remarks by King Abdullah that the Saudi economy was still 'strong'. br /br /Jordanian shares saw some 'buying by foreigners,and Kuwaiti stocks rebounded this on reports that the state-owned Kuwait Investment Corporation planned to buy equities after the holiday with USD 20 billion.

In the energy market Wednesday, oil prices inched lower, with crude for January delivery closing at $46.79/barrel, down 17 cents. January reformulated gasoline lost 1.68 cents, to $1.0415/gallon.

In its weekly inventory report, the Energy Information Administration said that crude stocks fell for the first time in 10 weeks, easing 400,000 barrels for the week ended November 28. Analysts had been looking for a 2 million barrel increase.

The EIA reported that gasoline supplies also dropped, by 1.6 million barrels, and that distillates were off 1.7 million barrels. Refineries were operating at 84.3% of capacity, down from 86.2% a week earlier.

OPEC continued to send the message that it will cut production at its meeting in two weeks, with Qatar’s oil minister Abdullah bin Hamad al-Attiyah saying that the group wants crude oil prices at between $70 and $80 a barrel “because $70 is the minimum price at which we can [continue

...

When the president of the United States visited this region almost a year ago, the city of Dubai closed down for the entire day. Locals and expats alike jokingly refer to this event of yore as “Bush Day,” a day when they stayed home from work and watched movies as the leader of the “free world” took a Big Bus tour of the city.

Now, twelve months later, as W’s presidential twilight years draw to a close, another of the West’s leaders journeys to the Gulf region. Like Bush, England’s Gordon Brown is not particularly popular in the polls. But this captain from the west has more pressing issues to deal with than the restoration of his public image; he needs cash to rescue the world’s “emerged” nations from the brink of financial collapse. And so, hot on the trail of the dollars and pounds that have poured from the west

...

Analysts are trumpeting the recent drop in oil prices as a step toward normalcy. But is this celebration premature? Or perhaps even misplaced? After all, we all know that over the long haul, energy prices are headed in only one direction - higher. Crude oil plunged 8% to close at $106.23 a barrel last week - reaching its lowest level in five months - as the U.S. dollar strengthened to its highest point against the European euro so far this year. Crude oil prices actually declined for six straight days - the longest stretch since they did so from April 30, 2007 to May 7, 2007. U.S. fuel demand dropped 3.5% during the past four weeks. And unemployment spiked much more than economists had predicted. Even so, oil prices are still 41% higher than they were a year ago. "Demand destruction and the strength of ...