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Calculating geopolitic risks for oil prices
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Geopolitical concerns are moving back to the forefront of oil traders' considerations after three months of intense focus on market fundamentals, opening the door to sudden increases in oil prices even as the supply situation remains relatively comfortable.
Oil prices have been largely range-bound between $55 and $62 per barrel since early October even as OPEC moved to reduce supplies by 1.2 million barrels per day. On those days, my prediction was below $50 dollars at the end of January due to the economical circumstances,oil reserves and weather. I was wrong. I am losing my confidence every day for that prediction. It is time to recalculate the geopolitical risks for oil prices.
The market's focus on healthy stocks of crude oil and refined products in the major consuming countries eroded the so-called risk premium that was built into prices earlier this year.
Threats to global oil supplies -- ranging from tensions between the West and Iran over Tehran's nuclear program to violence in Nigeria that has slashed output from that country have not dissipated, fundamentals are becoming more bullish.
But more worrying is the worsening violence in Iraq and talk that regional rivals Saudi Arabia and Iran may intervene in the conflict.
You saw very hot money run into the market and run out again this summer, but I think what you are seeing now is more of a gradual rise in response to the global situation in general, especially the deterioration of things in Iraq.
A security adviser to the government of Saudi Arabia warned in a Washington Post article published on Wednesday that Riyadh was prepared to intervene in the conflict to protect Iraq's Sunni minority if the United States pulled out of the country, raising the specter of a clash between Sunni Saudi Arabia and its largely Shi'ite regional rival, Iran.
Heavy bidding for cargoes of Nigerian crude oil on Thursday pushed differentials for light sweet Bonny Light crude to record highs. Traders said supply disruptions from some fields and fears of lower than normal volumes from other facilities spurred the buying.
Crude oil for January delivery rose $4.19, or 7.1 percent, this week on the New York Mercantile Exchange. Futures rose 30 cents, or 0.5 percent today to $63.43 a barrel, the highest close since Sept. 18.
OPEC shipments will fall 0.8 percent in the month to Dec. 16 to 24.3 million barrels a day, compared with 24.5 million barrels a day in the four weeks ended Nov. 18.
Refineries operated at 88.1 percent of capacity last week, up 1 percentage point from the week before, the Energy Department report showed. Refiners typically start in November units that had been closed for maintenance as they prepare for increased fuel demand in the winter months.
U.S. gross domestic product increased at an annual pace of 2.2 percent in the third quarter, the slowest this year, the Commerce Department said Nov. 29. The U.S. consumes 25 percent of the world's oil. The oil survey has correctly predicted the direction of prices 53 percent of the time since it was introduced. |
| Tarih
: 04.12.2006 |
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Copyright
© 2006 Mert TOKER All Rights Reserved. |
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