jacky | December 21, 2008 | 8:56 pm
OPEC was founded on September 14, 1960 by Iran, Iraq, Saudi Arabia, Kuwait and Venezuela. The goal is the establishment of OPEC to set world oil prices and allocation of production of each member. In other words, short-term goal of this organization is how to transfer income from the oil companies to each country’s oil producers. Meanwhile, the OPEC has a long-term goal to achieve and maintain monopoly power in the international oil market.
In the process, the organization has a big role in controlling the price level and the development of the world oil market. This is seen how the organization is the “First Oil Crisis” caused by the embargo made by Saudi Arabia that creating a supply of oil decreased while the demand for oil increased more than twofold. In addition, the shock from the supply side is also caused by the Iranian revolution in 1978 until 1979. To avoid the oil crisis, OPEC tried to increase international tax reference price, the price level that is determined by the oil companies. Thus, OPEC can do monopoly in world markets.
Various factors that affect the fluctuation of oil prices in world markets to give our interpretation that the oil price fluctuation is caused by political factors that occurred in the country’s oil producers compared with the economic factors. However, some energy economists try to rebut the argument and said that the price fluctuation in world oil market is also caused by economic factors.
The establishment of basic World Oil Price
Determination of the level of world oil prices by OPEC influenced by the following factors:
• Inventories of oil producers in each country.
• A Trade
• Economy refinery
• Psychological and political factor (factor is more happening in the Middle East).
• Meanwhile, world crude oil prices will be influenced by factors:
• The composition of hydrocarbons contained in the oil
• The weight of the expressed in degrees API (American Petroleum Institute)
• The content of sulfur contained in the oil
The price system used by OPEC before the 1973 system is the fix, where the organization is determining the amount of oil price level that will be traded in international markets. However, in line with the development of the regional market and the market structure that is competitive, the system used by OPEC is no longer effective to run. Furthermore, price is no longer determined by OPEC but by each country in accordance with the basic determination that is used. Basics used by producers in the country determine the price level is as follows:
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jacky | December 20, 2008 | 12:18 pm
Oil Crude prices rebound above $50 U.S. dollars per barrel, but then declined again on Monday local time, because traders consider the possibility of a decrease in OPEC production this weekend and continued economic turmoil. In New York, light sweet crude oil for January delivery ended at 44.51 U.S. dollars per barrel, down 1.77 U.S. dollars from the closing price Friday. Original oil prices rebound to be 50.05 U.S. dollars per barrel, the highest level since 1 December.
In London, Brent crude North Sea for January delivery picked up to the highest level of 49.96 U.S. dollars per barrel, also the highest peak in the last two weeks, but back off a dogged 44.60 U.S. dollars per barrel, down 1.81 dollars U.S..
The State Oil Organization (OPEC) will be meeting Wednesday, in Oran, Algeria, and is estimated to trim production again to raise the price of oil down by the oppressive peak of global economic concerns.
OPEC Secretary General Abdalla Salem El-Badri said to the reporter right in Oran on Monday, that he will consider the possibility of “a very large decrease” in production of crude oil, adding that “the market the excess supply of oil.” “This morning they (the price) is based on the many announcements by OPEC that the production of a substantial reduction on Wednesday,” said Andy Lipow of Lipow Oil Associates.
“But honesty after that, people continue to see demand from the equation,” he said. “The demand and the economic situation throughout the world continue to push oil prices down.” Oil prices have fallen about two-thirds the number since the highest price reached a record above 147 U.S. dollars five months ago, because of recession in many countries.
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jacky | December 20, 2008 | 12:12 pm
The price of crude oil plunged on Friday, local time, after a bailout plan for the automotive industry so that the U.S. failed to heighten concern about slowing down on demand due to the global financial crisis bites. As reported by AFP, light sweet crude oil for January delivery fell 1.70 U.S. dollars to be closed at 46.28 U.S. dollars per barrel on the New York Mercantile Exchange. In the Intercontinental Exchange, London, Brent crude North Sea for January delivery plunged 98 cents on a steady 46.41 U.S. dollars per barrel.
Oil price rebound has been more than 10 percent on Thursday, amid signals that OPEC and Russia will cooperate next week in the reduction of production to support the increase of oil prices plunged. “At first, the price of commodities including oil to rally, but then forced by crisis of confidence in the middle of the failure of the U.S. automotive bailout plan,” said analyst John Kilduff of MF Global.
A bailout plan by 14 billion U.S. dollars to save the U.S. automotive industry is sick, failed in the U.S. Senate on Thursday, increasing the prospect bankruptcy General Motors and Chrysler, which have millions of workers. The burden of this global stock market Friday, and press the switch commodity prices.
“Crude Oil to be the decrease in the stock market on Friday,” said Nimit wine, a broker Sucden Analyst Company. “Reluctance to take risks created the automotive industry bailout after the failure.”
The State Oil Organization (OPEC) is estimated to announce the cutting of production at a meeting next Wednesday in an effort to encourage the increase of prices that have fallen from new record high above 147 U.S. dollars in July. OPEC, which produces 40 percent crude oil world, has been called producer countries of non-OPEC oil to participate in reducing production to keep oil prices decline sharply. Russia on Thursday is ready to join with OPEC to keep crude oil prices fall and will become part of the oil cartel if Moscow became interested members. Russian non-OPEC members, but ranked equal with Saudi Arabia, de facto cartel leaders, as the world’s largest oil exporter.
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jacky | October 26, 2008 | 12:19 pm
After running high, Oil crude price now is lower than $80 per barrel. Amazing right! Why Oil crude price decline very significantly? Why? Congress had question to American Giant Oil Company about how much the real price for oil crude price, How much US to produce 1 barrel? And the answer was very surprising, lower than $50 required for one 1 barrel. So why the price is too high (upper $100 per barrel)? The answer is very simple, Broker, Investor and speculator make it. They have power to increase or decrease oil crude price based on economic indicator. (Middle East Politic Situation, America Financial Condition, Others Legal data from Biggest Countries-rich countries).
Americans are still down with their biggest problem; Credit Crunch-Mortgage Crisis and now after the very long time lag, they enjoy the bad impact. Many employers are fired, Lower Demand on Import, Credit Crisis, Many Home owners have lost and more.
Is this case has positive correlation with decrease on Oil Price? Yup! For every economic situation has impact to global economic. When Americans down with their crisis, Our Local TV said, Which countries then buy Chinese Product and which countries will buy our products (Indonesian Product)??
Crisis in America has multidimensional effect. European, Japanese, Chinese and development countries also get the impact, the big impact. Many Central Bank fight force to cut their interest rate to avoid the worst. Russian and Indonesia suspended their stock market to avoid naughty investor and broker to do illegal transaction or to make it worst.
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jacky | July 15, 2008 | 9:25 am
Welcome to the Reuters Before the Bell news mail.
The government’s plans to stabilize Fannie Mae and Freddie Mac could only temporarily distract Wall Street from its longstanding jitters about the financial sector. Stock futures are pointing down as investors fret over IndyMac’s collapse last week and worry about the future of other banks.
With that sort of backdrop, the appearances of Fed chief Ben Bernanke, Treasury Secretary Henry Paulson and SEC Chairman Christopher Cox before the Senate Banking Committee should be interesting, to say the least.
The dollar has hit a record low against the euro and is down against an index of major currencies. Gold and U.S. Treasuries, on the other hand, are doing pretty well as some of the favored destinations in the flight to safety. Read more »
jacky | June 24, 2008 | 8:32 pm
Low against major currencies, conflict on middle east and worried about oil stock and disturbing oil supply in Nigeria have been pushing Oil price upper $138 per barrel on Tuesday. The current price closes to new record high made on last week. Markets are worrying with King Abdullah statement last Sunday that they will increase their barrel per day haven’t fulfill world stock. Actually Arabians have promised that his country produces more if available supply less than demand but so far the promise isn’t working.
Before that, King Abdullah claimed that running high on oil price is caused by traders and investors in market. King Abdullah said that they have increased their production and they did nothing when take profit taken investors still running.
Light sweet oil on august shipping rises from 1.30 to $138.04 level in New York Mercantile Exchange or close to evening trading season in European. On Sunday shipping, the contract risen $1.38 and closed at $136.74 per barrel. The increasing has been creating new record high on oil price last week, around $139.89 per barrel.
