Saudi Vows Fail To Knock Down Oil Prices

Conditional Pledge To Ratchet Up Production Fails To Compensate For Insecurity In Market

(CBS/AP)  Traders again shrugged off a pledge by Saudi Arabia to increase its oil production if needed and oil prices rose Monday, with the focus on disruptions to Nigerian supply and heightened Middle East tensions.

Saudi Arabia said Sunday it would produce more crude oil this year if the market needs it. The kingdom announced a 300,000 barrel per day production increase in May and said before the start of the meeting in Jeddah that it would add another 200,000 barrels per day in July, raising total daily output to 9.7 million barrels.

Any hopes that the weekend summit in Saudi Arabia would put the brakes on runaway oil prices were dashed when the Saudis announced the lower-than-expected increase, with a vague promise of more down the road when demand warranted, CBS News Correspondent Priya David reported.

The announcement had already been factored into oil prices, analysts said.

"The meeting was mildly positive but it wouldn't really deliver anything that would give a heavy correction in oil," said Mark Pervan, a senior commodity strategist at the ANZ Bank in Melbourne, Australia. "They pledged production increases that the market thought was base case."

Light, sweet crude for August delivery traded up $1.26 at $136.62 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. On Friday, the contract rose $2.76 to settle at $135.36 a barrel.

Ray Carbone, a senior oil trader with Paramount Options, Inc., told CBS' The Early Show on Monday that the Saudi's promise was simply "too little, too late."

Carbone told The Early Show that Saui Arabia could have pledged twice as much oil to the market, and it still would not have made a difference.

"It's the kind of oil, not really the quantity of oil that’s in question here," Carbone said, citing the need for more high-quality, easy to refine crude. That is not the oil produced by Saudi Arabia, but by nations such as Nigeria, where civil unrest has markets jittery.

Carbone added that "we may test the high spending" this week, predicting the price of a barrel of crude could reach the 140 dollar mark.

Saudi Arabia's pledge fell far short of U.S. hopes for a specific increase. The United States and other nations argue that oil production has not kept up with increasing demand, especially from China, India and the Middle East. But Saudi Arabia and other OPEC countries say there is no shortage of oil and instead blame financial speculation and the falling U.S. dollar.

Analysts said the meeting helped provide some clarity as to the size of spare OPEC capacity available. Saudi Arabia said it is willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009 - if the market requires it.

"I think where the market may be a little more comforted, which could see prices drift lower in the medium term, is more clarity and scope on OPEC capacity," Pervan said.

Total worldwide crude production is about 85 million barrels per day, but analysts say supplies remain tight amid disruptions to production from Nigeria, Africa's largest producer.

"The oil summit really has not done much to temper oil pricing," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "It was a modest output increase and hardly really compensates for the disruption out of Nigeria."

With expectations fading that the Saudi moves would drive the market downward, analysts suggested present high levels were here to stay, at least for the short term.

"Bubble or not, one thing is for sure, while the market has not gained any ground since that historic $16.10 rally back on June 05th/06th, it has not yielded any ground either," wrote trader and analyst Stephen Schork, in his Schork Report. "Thus, it is clear that the market is certainly comfortable with crude oil up around these levels."

Royal Dutch Shell PLC said Friday that it cannot meet contractual obligations to export oil from a Nigerian oil field following a militant attack Thursday.

However, the head of Nigeria's white-collar oil-workers union denied reports of a strike targeting Chevron Corp.'s Nigerian operations. While negotiations with the company over staffing levels were deadlocked, there was no workers' action on Monday, said Bayo Olowoshile, the head of the union known as Pengassan.

"As of now, work is going on and production has not been affected," Olowoshile told the Associated Press.

Strikes by white-collar workers infrequently immediately impact companies' oil production, which is largely automated in Nigeria.

Nigerian oil workers also reportedly decided to strike at a Chevron Corp. facility beginning Monday.

But oil prices might find some relief from Sunday's announcement by Nigeria's main militant group that it would halt attacks starting at midnight Tuesday. The Movement for the Emancipation of the Niger Delta declared a unilateral cease-fire, saying elders in the restive southern region had asked the fighters to allow peace efforts to go ahead.

The group's attacks have sliced about one quarter from Nigeria's normal oil daily oil output, helping buoy crude prices in international markets.

"The market will see if indeed that cease-fire holds for a bit of time," Shum said.

Also supporting oil prices were worries about heightened tensions between Israel and Iran, after Pentagon officials said Friday a large-scale Israeli military exercise in the eastern Mediterranean early this month could have been a demonstration of Jerusalem's ability to attack Iranian nuclear facilities.

In other Nymex trading, heating oil futures added nearly 5 cents to $3.8203 a gallon while gasoline prices by almost 3 pennies to $3.4580 a gallon. Natural gas futures rose 21 cents to $13.204 per 1,000 cubic feet.

Brent crude oil futures rose $1.29 to $136.15 a barrel on the ICE Futures exchange in London.

[tiredofthebs]

For all those McSame supporters...guess this shot a hole in your idea of "just drill more holes in Alaska, and off shore Florida". Pretty Obvious that no matter how much oil one drills for or pumps the market forces (read as rich folks with tons of money to manipulate the market) are driving the cost. Until we move off oil and on to bio-fuels we will never see the end of rising prices.

Posted by labrat9999 at 03:21 PM : Jun 23, 2008

This isn''t about POLITICS, it''s about MONEY! Bio-fuels ....... yeah. While millions STARVE, let''s take FOOD and make FUEL! The answer is NEW TECHNOLOGY in the automobile industry. I here precious little from this market about alternative methods to power vehicles other than with food. It will probably be YEARS before this type of technology is available. Until then, the SAUDIS and other oil rich nations rule the world.

It is a "little late" to be so excited. As one of the
above quotes mentioned "too little too late", democrat
or republican is totally besides the point. Don''t get
mad at the Saudis, they are business people who are
sustaining their economy according to their needs. Let
us "refresh" our short memory. Oct 1973, the "October-War" begins in the mid-east. Oil had been
$3.00 per barrel. YES THREE DOLLARS BBL. King Faisal
was unhappy that the United States threw their support
behind Israel. The Saudis raised the price of oil
from $3.oo bbl to $11.00 in the blink of an eye.
Maybe, just maybe, that would have been an opportune
time to "rethink" our energy "policy". But no; we''re
still sitting here at the same "pump" over thirty years later... Does "fool me once.." ring a bell here
? so what is the big "surprise" ? Look for $6.00
per gallon gas before you look for relief..

[dobbershome]

I''m really growing a large disliking to these traders.(traitors)

[noloyalisti]

These Saudis are part of the Bush crime cabal that are price fixing. The GOP stands for freedom? Freedom for the oil corporations to turn the countries of the world into dictatorships (like Saudi Arabia) or oil corporation fascist regimes (like the United States).

And they will keep doing it until the people do something about it.

[talkingham]

Some of "liberals" were in the military u know. And some of us, just by chance even know who ran the CIA Air Force for 25 years. It''s so secret he wrote a book on it.

[labrat9999]

For all those McSame supporters...guess this shot a hole in your idea of "just drill more holes in Alaska, and off shore Florida". Pretty Obvious that no matter how much oil one drills for or pumps the market forces (read as rich folks with tons of money to manipulate the market) are driving the cost. Until we move off oil and on to bio-fuels we will never see the end of rising prices.

[impeach_w]

Oh. If that''''s so then how come you know all the details? Posted by bhoogren

It The whole history of Iran-Contra Repaeting itself!



Follow the link and talk to some Special operations people. Air force or Army. what are they doing there at the Bases ollie north set up? Why don''t you prove it''s not true? Because it Really iS. I have my evidence Do you have ANY either way?

AN IRAN-CONTRA OPERATION, IS OPERATING FROM THE SAME BASES OLLIE NORTH SET UP WITH THE SAME PLAYERS. WE HAVE TROOPS (FIGHTING TROOPS) and A SECRET CIA AIRFORCE in GUATEMALA, NICARAGURA, HONDURAS, EL SALVADOR, ECUADOR, COLUMBIA and BELIZE! THE CIA IS SMUGGLING DRUGS AND WEAPONS YET AGAIN!

Please Look it up yourself this has some info: http://www.madcowprod.com/index.html


The CIA Secret Air force are Civilian planes purchased with drug profits whose ownership cannot be officially traced and hidden from any budget

[trishab4]

http://www.zeitgeistmovie.com

for the truth about Governments'' abuses and machiavelics...

[trishab4]

CBS: Saudi''s King Abdullah attends a high-level oil summit in the port city of Jiddah, Saudi Arabia, Sunday, June 22, 2008. King Abdullah said Sunday that Saudi Arabia was not to blame for soaring oil prices and instead pointed his finger at speculators, high fuel taxes in consuming countries and increased oil consumption in developing economies.

-And he is right!!!!! Our governments are abusing us!

[Latrocinor]

The CIA Secret Airforce are Cililan planes purchsed with drug profits whose ownership cannot be officialy traced and hidden from any budget

Posted by impeach_w
.. ... ... ...

Oh. If that''s so then how come you know all the details?

[guadalcanal3]

Correction...I meant: prices going "down" at the pump.

[guadalcanal3]

So does this mean that prices are going to go at the pump?...I doubt it.

[impeach_w]

The CIA Secret Airforce are Cililan planes purchsed with drug profits whose ownership cannot be officialy traced and hidden from any budget

[impeach_w]

Read the below link- WE HAVE TROOPS (FIGHTING TROOPS) and A SECRET CIA AIRFORCE

Posted by rf35 No, it is the not-secret Air force Special Operations Command. We won''t let the CIA have a "secret Air Force." The Air Force isn''t secret, just the missions.

OK then Why is the ARMY also there and why is it both forces "Special Operations" Command, This is in addition and in Support of the Iran-Contratype operation.
THere is NO WAY TO PROVE OWNERSHIP OF THESE PLANES. The official plane for the Govener of Texas is one of the old Iran-contra drug planes. Some recently Crashed Jets with more than 7 TONS of Cocaine were used in Extraordiary Reditions. Please look it up. please.

FOR ALL THOSE WHO CAN''T WAIT FOR W & Co. TO LEAVE.

IF YOU WANT THEM IMPEACHED-GET THIS STORY TO MAINSTREAM MEDIA AND PUBLIC.


AN IRAN-CONTRA OPERATION, IS OPERATING FROM THE SAME BASES OLLIE NORTH SET UP WITH THE SAME PLAYERS. WE HAVE TROOPS (FIGHTING TROOPS) and A SECRET CIA AIRFORCE in GUATEMALA, NICARAGURA, HONDURAS, EL SALVADOR, ECUADOR, COLUMBIA and BELIZE! THE CIA IS SMUGGLING DRUGS AND WEAPONS YET AGAIN!

Please Look it up yourself this has some info: http://www.madcowprod.com/index.html

[endofempire]

Write your congressman/woman and be explicit about your intent to campaign for the candidate who will help pass a law that will regulate oil futures trading.

[rudy654-2009]

Wish you were right about global warming being a hoax, but you aren''''t. Whether or not it is man-made is the question, not the basic principle. So, if it''''s hot in your house, do you turn on the heater?


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Posted by bobgee_1999 at 12:24 PM

You are of course right, but the dittoheads think Limbaugh is the ultimate scientist.

[tomar0317]

Let''s get digging in our own territory and keep the Alaska pipeline gas for use here in this country and stop exporting it. Let''s get alternative fuels up and running and stop worrying about feeding other country''s rich and let''s get clear of OPEC and S.American oil inports. In order to be able to help ours, we need to get ourselves well first.

[vnveteran72]

All the Bush administration cares about is their no bid oil contracts with Iraq for Halliburton, Exxon Mobil, BP. The Bush Administration thinks this is a solution. Alternative energies are solutions, not being a country that acts like a drug addict to foreign oil.

Brasil has done a good job of being at least 80% independent from oil.


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Posted by zoe2006 at 12:44 PM : Jun 23, 2008
+ report abuse

True. If even 50% of Americans installed HH2 generation systems in their Cars and Trucks, Gas and Diesel Supplies would be so overstocked, the price of Crude would crash overnight. With every Bubble comes a Bust, and Big Oil''s is coming.

[rf35]

WE HAVE TROOPS (FIGHTING TROOPS) and A SECRET CIA AIRFORCE

Posted by impeach_w at 12:34 PM : Jun 23, 2008

No, it is the not-secret Air force Special Operations Command. We won''t let the CIA have a "secret Air Force." The Air Force isn''t secret, just the missions.

[rf35]

Every time we went to the gas station, my grandfather used to say, "I wish those damm Saudi oil wells would all just dry up, then see what would happen." He felt it would force a change from our oil-based culture and economy. Well, it looks like it may be happening! The reason Saudi won''t pump significantly more oil is that they CAN%u2019T! They are at or very near peak capacity. The wells ARE drying up. Problem is, it has yet to have a real effect on out oil-based culture and is killing our economy because that economy is too cumbersome to make a major course correction away from oil.

Why is it so hard to figure who''''s responsible for the high gas prices. Supply and demand, speculators, refinery capacity, weak dollar? which is it. Someones full of it.
Posted by sillywilly4 at 12:15 PM : Jun 23, 2008

Answer: all of the above.