Don't lose sight of skyrocketing oil prices, which only continue to shoot upwards.
Crude oil futures on Friday hit record highs again on growing concerns about the prospect of global oil production not being able to keep up with strong demand, which is rising at its fastest pace in more than two decades.The most interesting bit of news in this story is how the global oil economy is running faster and faster just to stay in place. Production goes up, but all that extra production is immediately consumed. CNN/Money tells us today
A report that Opec shipments fell by 0.5m barrels a day in the four weeks to August 7 triggered the latest price surge as a fall in the oil cartel's shipments at a time when the world is soaking up all available output without increasing inventories could cause a further tightening in the supply and demand balance.
September Nymex WTI peaked at $43.23 a barrel in electronic trade, its highest level since crude futures started trading on the New York Mercantile Exchange in 1983 and exceeded the previous peak of $43.05 touched on Wednesday, before easing to $43.13, a rise of 38 cents on Thursday's close.
IPE Brent for September delivery reached a new 14-year high of $39.78 a barrel in early morning trade in London, up 54 cents from the previous close, and is on the cusp of breaking the $40 a barrel level for the first time since October 1990, in the lead-up to the Gulf war.
OPEC is pumping at more than 95 percent of capacity, the highest for a quarter of a century, and analysts said it had little room to boost output during emergencies.In fact, according to Reuters, we're functionally already at peak production since
while Saudi Arabia, the only OPEC producer capable of boosting supply, is finally bringing down crude prices, these are only for the low-quality grades that have a small impact on benchmark futures prices in London and New York, traders said.Most ominously, a temporary shut-down of YUKOS production could send NYMEX prices up to $45-$46/barrel. It would be hard for Bush to resist tapping into the Strategic Petroleum Reserve, and in fact pleasant for him to do so. However, Bush is surely hoping he can draw on the Reserve a bit closer to the election. Or maybe plunging oil prices combined with the Republican National Convention in late August is on tap?