Friday, Jul 06, 2007
Oil heads towards $80 a barrel
BBC News: Nigeria fears push oil over $76
Oil prices have surged past $76 a barrel amid growing concern that unrest in Nigeria will hit exports. The kidnap of a three-year-old British girl this week has been seen as an escalation of the violence that has plagued the oil-rich Delta region.
Posted by Webmaster @ 05:05 PM (126 views) Add Comment
9 Comments
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2. Alan said...
The US $ is slipping against the Pound and Euro. The Pound scored a 26 year high this week against the $. In order to maintain their purchasing power the oil producers have raised the price.
The troubles with Iran and the US have made countries stockpile.
3. harold said...
...but don't worry 'cos "headline infaltion" is falling.
Yeah right!
4. japanese uncle said...
An extremely vicious investment banker could have hired a few thugs for the purpose of kidnapping the little girl, after 'betting' on the oil price going up in the futures market, to make world's easiest billions. Just a hyphothesis.
5. deepak said...
Last year this time I think the price of oil was $78 a barrel. The MPC are so confident that inflation will come down becase inflation is the rate of increase in prices.
and compared to last year it still hasn't peaked.
Even if the inflation figures come down, but we have already absorbed the hike in the price chain. and this will get difficult to live with. And people will find difficult to pay for mortgages even at low inflation by the end of the year.
6. planning4acrash said...
It is my understanding that the first inflation forecast for this year assumed that oil prices would fall back to a stable price of between $40-50/barrel. That forecast priced in 5.5-75% interest rates by year end to bring CPI back to 2% in the medium to long term.
Oil has been elevated ever since. It could well hit £80-90/barrel with a heavy hurricane season in the Gulf of Mexico and, should it not subside over the summer, winter prices look bleak. Either way, the world's main energy commodity is almost double its expected level. The only thing stopping our full exposure is the strong pound, given that oil is priced in dollars. Therefore, when other country's raise rates, i.e. Europe and USA, we will probably be forced up further, regardless of internal pressures to maintain a high pound to reduce imported inflation.
It will be interesting to see whether the next inflation report involves a re-assessment of interest rates in light of elevated oil prices. The committee may well consider it a blip. But, its been at this level for so long now, that it is only time before central banks start to realise that the world is experiencing structural, as opposed to statistical changes.
Oil, like interest rates, takes a long time to feed into prices because manufacturers absorb higher costs if they think them temporary, and the supply chain is long, with oil contracts agreed long in advance. Oil futures provide the equivalent of fixed term mortgages, allowing people to buy oil at today's prices for a few years time. This issue is therefore an unpredictable sleeping giant.
7. semi-detached-from-reality said...
I like Japanese Uncle, enjoy reading his posts. Thank you JU.
He combines financial world knowledge with an understanding of human psychology; who's the biggest bully wins.
It's a global, corporate, computerised school playground scenario.
Planning4, you're bang on about the oil too. I believe that's the main key for the future. Ever see Mad Max II ?
8. japanese uncle said...
semi-detached-from-reality
Financial world is based on human psychology not least on human illusion.
Those who master the black art of manipulating this aspect of his fellow mankind can be millionares or billionares. There are people vicious beyond belief out there. Ordinary people must thus be cautious about any information dispatched from their quarters, BoE, the City, Wall Street, BBC, all the same; infested by the shameless financial thugs whose only concern is to stage something in which money is shifted from the less informed/knowledgeable to those black arts masters; wars, inflation, housing bubbles. They call it strategic thinking, I call it criminal manipulation.
In summary, do not think using your neighbour's brain, but on your own.
9. japanese uncle said...
Speaking about oil, the amount of oil reserve seems more like the house price, being a matter of opinion rather than established fact, as I clearly recall circa 1970 'experts' were seriously warning that oil would last only 30 years. And that 30 years have long passed. The world of oil business involves big science, thus is a small community despite its scale of impact, and this community can be controlled by the powerful business interests. Bribe a dozen of scientists, that's all. A few millions each may be enough to silence the voice of truth. When trillions are at stake, we simply cannot take any information at its face value. By keeping people misinformed through the art of scaremongering, you can keep rigging the market. The same is true about the global warming. Earth surface is shifting with tens of millions of years' cycle. How silly It is to assume a long-term trend on the basis of the observation and findings for just a few decades in the past! No wonder Al Gore with massive family business interests in nuclear industries, is peddling the Inconvenient Truth these days.