Crude Oil Report Pt. 2

Crude Oil Report Pt. 2 - Gilreath 54 III.B. (November 12th...

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Gilreath III.B. Daily Historical Future Price Analysis (November 12 th 2007 – December 28 th 2007) 54
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S1 D1 Q P Q1 P1 D2 P2 Q2 Gilreath November 12, 2007 According to Matt Chambers of Dow Jones Newswires, “Crude oil futures fell to one- week low Monday, pressured by a stronger dollar and concerns slowing U.S. growth could hit energy demand.” Prices fell as low as $93.54 a barrel in intraday trading but made back some losses after Saudi Arabian Oil Minister Ali Naimi told Dow Jones Newswires there will be no output boost this weekend when OPEC heads of state meet in Saudi Arabia. Naimi dismissed earlier talk by an OPEC official that Saudi Arabia, OPEC’s de facto leader, is pushing for a 500,000 barrels-a-day increase in output if prices drive toward $100. The cartel won’t discuss production until its December 5 th meeting in Abu Dhabi. (Figure 1) Weak demand for U.S. refined products such as gasoline and heating oil in recent weekly government reports are weighing on prices and could portend further losses, Eric Wittenauer, an analyst at A.G. Edwards in St. Louis said. (Figure 2) S1 D1 Q P Q1 P1 S2 Q2 P2 55 Figure 1: If supply decreases or doesn’t increase as expected, this will drive up the price of crude oil as the quantity falls. S1 shifts to S2 as in the graph on the left. Figure 2: Weakening demand in the U.S. shifts the demand curve from D1 to D2. Prices fall for the quantity of oil in the market.
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Gilreath November 13, 2007 According to Gregory Meyer of Dow Jones Newswires, “Stratospheric crude oil futures prices were pulled closer to earth Tuesday, falling sharply on forecasts of slower-than- expected world oil demand growth and the expiration of options.” (Figure 1) Sparking the sell off was a monthly oil market report from the Paris-based International Energy Agency, the energy watchdog for Organization for Economic Cooperation and Development nations. The IEA cut its 2007 world oil demand growth forecast to 1.2% from 1.5% in the previous report. The IEA also cut its oil demand growth forecast for the next year to 2.3% from 2.4%. Soaring prices were assigned some of the blame. (Figure 1) Overall demand forecasts that decline can also be a result of consumer confidence in the markets reliability to sustain the high prices at the same projected demand. Potentially alleviating geopolitical risk, Iran has given the U.N. nuclear agency blueprints showing how to mold uranium metal into the shape of warheads, diplomats told the Associated Press, in an apparent concession meant to head off the threat of new U.N. sanctions. Analysts Phil Flynn of Alaron Trading Corp. in Chicago said the development also helped remove support for prices. “It may be another reason why people are selling oil today, hoping a conflict might be avoided,” said Flynn. (Figure 1) Also burdening futures prices were comments from Saudi Arabia’s oil minister Ali Naimi that the kingdom didn’t foresee a recession in the U.S. and that the world economy remained resilient. Naimi added he was skeptical about claims of worsening tightness in
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Crude Oil Report Pt. 2 - Gilreath 54 III.B. (November 12th...

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