Weak Dollar Pushes Oil Prices Higher

Investors Shrug Off Saudi Promises To Boost Production And Bid Oil Up To Near $140 A Barrel

(CBS/ AP)  Crude oil futures hit a record near $140 a barrel Monday as investors shrugged off Saudi Arabia's promise to boost production and instead focused on a weaker dollar.

Light, sweet crude for July delivery soared to a trading record of $139.89 before retreating to trade up $2.39 at $137.25 a barrel on the New York Mercantile Exchange.

Many investors buy commodities such as oil as a hedge against inflation when the dollar falls. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies. Many analysts believe the dollar's protracted decline is a major factor behind oil's doubling in price over the past year.

In afternoon European trading, the euro bought $1.5470, up from $1.5354 late Friday in New York.

Also supporting prices was an overnight fire at a StatoilHydro ASA drilling rig in the North Sea, which could affect as much as 150,000 barrels of daily oil production, said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut, in a research note.

Saudi Arabia, the world's largest oil producer, told U.N. chief Ban Ki-moon over the weekend that it would boost output by 200,000 barrels a day, or by 2 percent, from June to July. In May, the kingdom raised production by 300,000 barrels a day.

Speaking to CBS News Foreign Affairs Analyst Pamela Falk, Secretary-General Ban Ki-moon said on Sunday that the Saudi oil minister confirmed to him that the government will increase its oil production to 9.7 million barrels a day, with a cumulative increase of 500,000 barrels over the course of June and July, a slight clarification of earlier news reports.

The new production figures, Falk said, would actually represent an increase of 300,000 barrels a day in June, and 200,000 in July.

The latest promise of a production increase by the kingdom was largely ignored by traders Monday amid strong global demand and falling production elsewhere.

"Saudi Arabia's proposed output addition will only go some way in offsetting the significant output losses in other OPEC nations like Nigeria," said Barclays Capital analyst Kevin Norrish in a research note.

James Cordier, president of Tampa, Florida-based trading firm Liberty Trading Group and OptionSellers.com, said Saudi Arabia has "to increase by north of 1 million barrels per day" to have an impact on prices, "and the market doesn't think they have it."

Saudi production hikes can actually push oil prices higher by stoking concerns about spare oil capacity - the reserves Saudi Arabia holds out of production in the event of an unexpected global supply shortfall.

"The last time Saudi Arabia made such a move, in 2004, traders bid crude higher because of concerns of insufficient spare capacity," Armstrong said.

According to the International Energy Agency, OPEC spare capacity fell below 2 million barrels a day in May for the first time since 2006. The majority of that - about 1.45 million barrels a day - was in Saudi Arabia.

In other Nymex trading, July gasoline futures rose 3.36 cents to $3.4962 a gallon, while July heating oil futures rose 7.32 cents to $3.91 a gallon.

July natural gas futures rose 30.7 cents to $12.932 per 1,000 cubic feet.

Anadarko Petroleum Corp. said Monday that natural gas production from a project in the deep waters of the Gulf of Mexico has been restored, hitting a gross rate of about 900 million cubic feet per day. Output from the Independence Hub was halted April 8 after a pipeline leak was found.

[skyk-2009]

Weak Dollar? I guess Deficits DO matter after all.

[bradster999]

I am not sure investing in oil is such a good idea. Multi-millionair Richard Rainwater is selling off almost all his oil investments. Maybe he knows something we don''t. There are other factors that would also seem to indicate that the OIL bubble is about to burst. Saudi arabia is increasing oil output along with the United Kingdom and there is some talk of imposing regulations on oil commodities trading to stem big hikes is prices. Even the UN is worried about global sustainability with oil binging so high. Others keep bringing up india and China as an excuse for high prices but I don''t buy it. They subsidize oil and they won''t be able to keep doing that much longer at these prices. If I had any investments in oil right now I would sell them as fast as I could. But that''s just me. On our website we conducted a poll, asking the question "who do you think is to blame for high oil prices" over half say speculation is to blame. http://www.nbtv.ca

[dzapple]

If Bill Clinton had signed into law the Republican Congress''s 1995 bill to allow drilling of ANWR instead of vetoing it, ANWR could be producing a million barrels of (non-Opec) oil a day--5% of the nation''s consumption.
One of the first acts of the new Democrat-controlled congress in 2007 was an energy bill that "calls for a huge increase in the use of ethanol as a motor fuel and requires new appliance efficiency standards." By focusing on alternative fuels such as ethanol, and not more drilling, Democrats have added to the cost of food, worsening starvation problems around the word and increasing inflationary pressures in the U.S., including prices at the pump.
"The liquid hydrocarbon fuel available from American coal reserves exceeds the crude oil reserves of the entire world," writes Dr. Arthur Robinson in an article on humanevents.com. The U.S. has approximately one-fourth of the world''s known, proven coal reserves. Coal would be a proven, and increasingly clean, source of electric power and--at current prices--a liquified fuel that would reduce our dependence on foreign oil. Yet Dems and their enviro friends have fought, and continue to fight, both coal-mining and coal plants.
With consolidation in the oil industry, has come reduced competition. Remember, most of the major oil company mergers -- Shell-Texaco, BP-Amoco, Exxon-Mobil, BP-ARCO, and Chevron-Texaco -- happened on Clinton''s watch. The number of oil refiners dropped from 28 to 19 companies during Clinton''s two terms

[dzapple]

With gas prices topping $4 a gallon and the idea of tapping into oil under the Arctic National Wildlife Refuge or the Outer Continental Shelf becoming more popular, liberal members of Congress are changing the basis for their opposition to drilling.
Opposition to opening up new drilling has traditionally focused on environmental concerns, but the chairman of the Democratic Congressional Campaign Committee on June 15 accused oil companies of not using what they already have.
When CNN host Wolf Blitzer asked "why not start drilling" in more U.S. areas "that could dramatically increase supply and as a result reduce the price per barrel or the price at the pump?" Blitzer noted that House Speaker Nancy Pelosi (D-Calif.) "votes against every one of these drilling propositions."

[dzapple]

Considering how much untapped oil is known to exist, not just in the United States, but worldwide, one would think that its current price was some kind of anomaly and it is.
For sheer insanity, however, consider a nation that has an estimated 31 billion barrels of oil offshore of its coasts and 117 billion barrels of oil under land owned or managed by the government, plus 139 billion barrels beneath privately held land.
In just one area, a desolate place designated a wildlife refuge, there''s an estimated 7.7 billion barrels untapped. The nation with this abundance of oil is, of course, the United States of America. Most of the areas where oil is known to exist have been ruled off-limits to any exploration or extraction by the government.
In the areas where it is accessible, drilling for it is hugely encumbered and often denied by the National Environmental Policy Act, the Clean Water Act, the Endangered Species Act, and the National Historic Preservation Act.
If, however, you connect the dots, you will have noticed by now that America''s energy problems, namely the price of a gallon of gasoline or heating oil, is making everyone miserable thanks in great part to environmental legislation designed to make it impossible to access oil on both public and privately held lands. Then, just to make matters worse, the government requires that every gallon of gasoline include the additive, ethanol, which reduces its mileage and increases its cost.

[mcv57]

Weak Dollar? I guess Deficits DO matter after all.

Posted by skyk

Can you imagine the printing press speed pace, it''s almost as fast as the oil being pump-out of OPEC. Uncle Benny is going to have to come up with something that will back-up that Monopoly money or all this is going to be in vain, soon.

[dzapple]

The U.S. mandate for ethanol as a gasoline additive has already significantly put the world''s food supply in jeopardy, but most Americans are blissfully unaware that it requires 1.5 gallons of ethanol to produce the same energy as a gallon of gasoline. It actually emits more carbon dioxide than gasoline. It is an environmental hoax.
The world is afloat an ocean of oil. Meanwhile, the United States continues to rule 85% of its offshore oil off-limits to exploration and extraction. This is occurring while the Chinese prepare to pump oil just offshore of Cuba, a mere 90 miles from Florida. It is occurring while the Russians are looking to plant their flag on potential reserves of subterranean oil in the Arctic
The next time you hear a politician say we need to be "energy independent", ask him or her why Americans cannot have access to the oil reserves known to exist in California, in Alaska, and in many of our other States or off the coastlines of Florida and elsewhere.

[dobbershome]

Where have I heard this before?

[feelfree4u]

Re: "Weak Dollar Pushes Oil Prices Higher"

Wow!

It only took CBS several YEARS to figure this out.

[bgwinnett]

Uncle Benny is going to have to come up with something that will back-up that Monopoly money or all this is going to be in vain, soon.

Posted by mcv57 at 06:56 PM : Jun 16, 2008

He has, NYC skyscrapers. LOL

[mcv57]

Posted by dzapple

Not a hoax, just buying time.

I have been giving the gobal financial, social, and government senario some thought. It really does not matter at this point ... the world is in a collision course with war and destruction.

Trillions of dollar of debt (somewhat stablized due to Iraq''s embezzlement of resources), the rise of social unrest (poverty, greed, and immorality), and gobal government injustice and corruption has actually made any real change of recovery.

Let say that hit a bonaza of oil reserves in Alaska, and the Hydrogen Car goes into mass production. The three headed monster (G8) couldn''t control the perverse that has rooted in every corner of government and corporation - it would take years of legal manuvering and a Gobal Beast to purge its network and established a sole dictatorship.

So where does this senario lead: YES, WAR, WAR, WAR! I really don''t support NAZIS government, but Hitler had the right idea for such an imperfect and perverted world. Hitler, being human, allowed his lust to destroy himself - he attacked Russia much too soon. It is impossible to imagine this Beast would have succeeded - modern day Roman Empire with Nero at the throne.

It is sad, but I believe Jesus knew the nature of flesh and its power over this world. It must be reborn...

[bgwinnett]

Uncle Ben''s bluff got called it seems.

[mcv57]

I keep correcting this but CBS will not cooperate:

"... and gobal government injustice and corruption has actually made it impossible for any recovery."

[jerr11]

It''s the ultimate swindling of America.

The neocons who don''t believe in taxes have been printing money to finance their war of profiteering in Iraq.

A huge supply of US dollars in the world means a worthless and devalued dollar!

Since Bush took over in 2000, the US dollar has dropped 40 percent in value.

If you don''t believe me, just take a trip north of the border.

It used to be US$1 = CAN$1.40.

Now, it''s US$1 = CAN$0.88.

That''s DEVALUATION!

The end result from all the printing of US dollars?

The government is flush with cash, we lose 40 cents in every dollar we earn.

That''s the neocon way to taxation!

[darnedsocks]

WHEN IS CONGRESS GOING TO STOP THE SPECULATORS?! OH, YEAH, I FORGOT!! IT''S THE SPECULATORS WHO ARE PAYING THEM OFF!

WHAT SORT OF A SYSTEM OF GOVERNMENT DO WE HAVE THAT NO LONGER LIVES BY PRINCIPLE, BUT ONLY LIVES BY GREED?

[dobbershome]

mcv57:

Nicely said.

[patriot12436]

Is there anything that doesn''t drive the p[rice of oil higher.

[deacon20081]

Now with Iowa loosing 1/4 of it''s CORN Crop to flooding; Gas Prices will shoot up because of a Shortage of Ethanol NO Doubt.

[dobbershome]

Is there anything that doesn''t drive the price of oil up? ANSWER: NO

[patriot12436]

I hope every one is writing their senators and letting them know how displeased the American public is with their inaction. I also think we need to vote all incumbents out of office. They had their chance and did nothing. Hopefully afterr bush is out we can get him prosecuted for war crimes and also go after anyone who helped him create this mess. If we do not take action united as one people, then i am afraid our democracy is going to destroy our country. I do not want to see a civil war in our homeland, but if things keep gettig worse i am convinced it will happen. When enough people lose their homes, life savings and jobs, cannot feed their families then this is what will happen. It happens daily in other countries. I hope we vcan prevent it in ours.

[patriot12436]

We need a govt that will terminate foreign aid. We can no longer afford to support the rest of the world. We need a govt that will address the problems we have here at home. We need a govt that will bring our troops home from Iraq. We need a govt that listens to the people and governs us the way we want to be governed.

[patriot12436]

I received a letter from a republican senator today telling me how our foreign aid program has been in place for 50 years and does not work. Then he went on to say we need to revise the program. We don''t need to revise it we need to dump it. It hasn''t worked for 50 years it isn''t going to work.

[Gary Kempf]

James Cordier, president of Tampa, Florida-based trading firm Liberty Trading Group and OptionSellers.com, said Saudi Arabia has "to increase by north of 1 million barrels per day" to have an impact on prices, "and the market doesn''t think they have it."

Tranlation:
James Cordier can keep pushing the price of oil up, it is not like the U.S. Government will stop him or others. They will keep laughing all the way to the offshore banks, if they have no hesitation at destroying the American working class. You have to figure they aren''t paying taxes on all of this manipulated windfall as well.

Just thoughts on this ***!

[intheshade-2009]

One big influence on oil prices and the value of the dollar is the embargos on Iran. We can all see their response; Iran has pulled their money out of the west and are investing it in Russia, China and the Far East. They won''t be selling oil to the west, because the west might freeze the payments for their oil. They will be selling mainly to China and India. They wont be buying EU or US goods, because the money they use to pay for their purchases might be frozen. They will only buy goods from Russia and China, the same place the EU and the US buys their goods. Iran has lost nothing. We loose Iranian investment, Iranian oil, and foreign custom for our goods and services. The Bush oil companies win because the loss of Iranian oil on the western market will drive our prices even higher. I can see why the Russians and Chinese go along with this. This plan has all the hallmarks of the genius, George W. Bush.

[petro49l]

The Amazonian rain forests could return in South America. Equipment, labor, and money would regenerate the ecology. American Oil Companies provide revenues by drilling petroleum from the ocean floor. Governments lease the property to the oil business. Arab oil wells are dry, low grade, and expensive. Why not go to a place where the oil is top quality, easily transported, and reasonably priced?

[aisdoomed]

I live near the Mexican border,where a gal of gas is $2.58..love it!!

[midland666]

Bring on the Amero, Bring on the north american Union,

[chenz66]

I hear the Saudie prince has a case of indigestion. Better raise the cost of oil just in case!

[deacon20081]

I can see it now "Next Up In The NEWS "Corn Crops destroyed in Iowa" "Ethanol production is ramped up" "Food Prices Triple"
"Exxon to accept "Clear" Car Titles as collatoral for Fill Up''s at All Stations" "George Bush Declares Matrial Law and Suspends Elections"
" False Flag Ops coming to a location near you"

[noloyalisti]

Mission Accomlished!!! Don''t think for a second this was not part of the Rove-Bush-Cheney-McCain neo con men plan. They have the oil companies playing us for the fools we are. Time for general strikes yet to take back our country?

[labrat9999]

Say I have an idea...why don''t we drill for oil in Alaska? What do you mean that''s not the solution? According to my plan it will only take 5 to 10 years to get that oil! So what''s wrong with that? You ought to see my math on how much the Iraq war will cost...no don''t worry, once the Iraqi people are free of Saddam they will be throwing flowers at our boys in uniform and the gas they sell will pay for the war. Sound familiar? Vote Republican and you''ll hear more of the same!!

[noloyalisti]

The problem is that the whole reason for the disaster in the Middle East is so that the greedy wasteful Americans coudl continue to drive their Suburbans to the shopping malls in the suburbs.

The oil corporations are sitting on oil and oil leases so that the prices continue to rise. How is a decision for more drilling going to help? And how about the fact that more drilling adds to consumption and global warming. Drilling offshore or in the Arctic is a stupid GOP war-mongering Reaganesque nightmare for the environment.

[mcv57]

RBS issues global stock and credit crash alert
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 12:19am BST 19/06/2008


Have your say Read comments

The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank''s credit strategist.

A report by the bank''s research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

REALLY DOES NOT MATTER AT THIS POINT!