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[marketmaven]

Crude futures end the week at a new record close

By Myra P. Saefong
SAN FRANCISCO (CBS.MW) -- Crude futures closed out the week at a new record close in New York, with the November contract at $48.88 a barrel. That's the highest closing level for crude futures since the Aug. 19 close of $48.70, but prices are still below the intraday all-time high of $49.40 from Aug. 20. November crude closed up 42 cents for the session and up $3.29 for the week.

http://www.peakoil.net/
Deutsche Bank warns Oil Price may hit $100
by James Dow, Economics Correspondent
(Now $5/bbl above even this level)
Oil prices could potentially hit $100 per barrel, analysts at Deutsche Bank warned yesterday - as the cost of US light crude hit a 21-year record of almost $44. Adam Sieminski, Deutsche’s global energy strategist, claimed that oil supplies have become so tight in recent weeks that a serious disruption in the Middle East could send prices rocketing to unprecedented heights. He said: "It is worth asking ourselves - ‘what would happen tomorrow if we lost four million barrels a day, due to some accident?’ Or let’s say Iraq’s two million barrels a day became unavailable. OPEC’s got no spare capacity. And that could be it - $100 per barrel."

Sieminski stressed that this was not a wild claim. "The last time OPEC was at 95-100 per cent capacity was in 1973-74, and again around 1980. And disruptions put prices up by 50 to 100 per cent.

"We’re at $40 already, so a repeat gives you $60-$80 per barrel." Two separate instances of disruption, on this logic, could take the price up a further step to $100.
Benchmark US light crude came within a whisker of $44 yesterday, touching $43.92 at its peak. The price sank back to $43.50 by late evening.

The spike came after the US raised its security alert to "high", citing a possible al-Qaeda attack on financial institutions. The announcement was made on Sunday, but yesterday was the first chance for markets to react.
Separately, Russian oil giant Yukos was told by Moscow it will begin investigating the company’s tax payments from 2002 - earlier than before, and a move that could add to its already massive bill.

The news was softened by an announcement from the Russian energy ministry that oil output in the country hit a new post-Soviet high of 9.33 million barrels per day in July. Brent crude, which rose above $40 to a fresh 14-year high of $40.05 on Friday, sank 20 cents to $39.85.
Sieminski said: "Most of the analysts who look at the fundamentals of supply and demand will tell you we’re now at the top [of the oil price]. But as long as the incremental supplies continue to come from countries where availability is an issue, the potential for prices to stay high is, itself, very high."
Market fears will calm down if sabotage or other disruptions do not emerge, and this could see $5 a barrel come out of the price by the end of the year, he estimated. "But, fundamentally, we’ve got to slow down demand growth. And, historically, the only way to make a lot of progress with that is a recession. So if you’re worried about the oil price perhaps you’ve got to ask, which do you prefer?"
(Reference furnished by Dale Pfeiffer)

The long-term price of oil in 2003 dollars through 2003 is shown in the attached graph. It looks as if the volatility imposed by the difficult swing role of OPEC is over, and that prices are set to rise to reflect the underlying supply constraints. The remarkable stability before the foreign companies were expropriated in the main producing countries stands out, and a future rise into the $40-60 range does not look altogether out-of place, still being below the 1980 spike.

409. How Realistic are OPEC’s Proven Oil Reserves?
In an excellent article under the above title in the August issue of the Petroleum Review, Dr Mamdouh G. Salameh, who is a respected consultant to the World Bank and member of the Institute for Strategic Studies in London, suggests that reported OPEC Reserves are exaggerated by about 300 Gb, reducing the World Ultimate to 1800 Gb. He further lists annual world discovery (ex USA & Canada) as shown in the attached table, which has averaged 7.4 Gb, far below average consumption of 26 Gb. This incidentally further undermines the widely reported Mean Probability estimate for new discovery by the USGS which averages 21.6 Gb for the period 1995-2025. The High Probability estimate, which averages 11 Gb, is also still high but comes closer to the mark. Those not versed in Probability Theory might indeed expect the case with high probability to come closer to the truth than the Mean value. It is worth noting in passing that the relatively high discoveries for 1999 and 2000 result largely from just two exceptional finds: Kashagan in Kazakhstan and Azadegan in Iran.