Tuesday 23rd September 2008

Oil Hits $130 a Barrel

Fears petrol prices will soar further out of control

---

Oil spiralled to more than $120 a barrel last night – prompting fears petrol prices will increase before they’ve managed to drop. Petrol firms have been accused of profiteering because while oil prices fell over the last few months forecourt prices remained the same.

But now oil prices are soaring again which is likely to lead to even more inflated prices at the pumps. The cost of oil reached $130 at one point, before settling at $120.

Ray Holloway, director of the Petrol Retailers Association, said fuel prices are expected to rise in November as a result. He said: ‘Don’t panic yet. Often with a spike like this, the price dips back again within a day or two. It will be a few days before we know if there is going to be a knock-on effect at the pumps.’

He added that the spike in oil prices was down to three things: a pledge by the Saudis to cut oil production by half a million barrels a day, a surge of speculators buying into the oil market, and a weak dollar.

[cas84]

Where have you got these figures from?

I am a commodities trader... Brent Crude peaked yesterday at just under 104$. Light Crude 110$. Neither of them got anywhere near 120$.

[cas84]

Ignore my previous comment, you are referring to the figures for Oct delivery. I trade Nov delivery right now.

In any case it is going to come down slightly today, if I have got my indicators right anyway...

[Welshbeef]

Yet another nail in the big petrol engines coffin IMHO.
Dag dags here we go.

[steebo888]

watch how quick the pump prices go up

[sprinter885]

cas84 said:

Ignore my previous comment, you are referring to the figures for Oct delivery. I trade Nov delivery right now.

In any case it is going to come down slightly today, if I have got my indicators right anyway...

Well get on & start trading the bloody price downwards will ya !!!

[Shnozz]

Given that petrol at the pumps is yet to fall to display the recent drop in oil prices...does this mean that the pump price will go up regardless?

Oil last year at $95 a barrel = £0.89 at pumps
So oil at $135 a barrel = £1.20 pumps
Oil dips to $95/barrel = £1.10 pumps
Oil goes back to $135 a barrel = £1.40 at pumps

eh?

[Wadeski]

yeah after all its just short selling that drives asset value down. I heard it on the news so it must be true.

So start shorting oil, so I can have V-power for 70p / litre please.

[youngsyr]

Shnozz said:

Given that petrol at the pumps is yet to fall to display the recent drop in oil prices...does this mean that the pump price will go up regardless?

Oil last year at $95 a barrel = £0.89 at pumps
So oil at $135 a barrel = £1.20 pumps
Oil dips to $95/barrel = £1.10 pumps
Oil goes back to $135 a barrel = £1.40 at pumps

eh?

Don't forget that you need to take exchange rate fluctuations into account(note the $ and £ signs in your examples!).

Edited by youngsyr on Tuesday 23 September 11:42

[mat205125]

youngsyr said:

Shnozz said:

Given that petrol at the pumps is yet to fall to display the recent drop in oil prices...does this mean that the pump price will go up regardless?

Oil last year at $95 a barrel = £0.89 at pumps
So oil at $135 a barrel = £1.20 pumps
Oil dips to $95/barrel = £1.10 pumps
Oil goes back to $135 a barrel = £1.40 at pumps

eh?

Don't forget that you need to take exchange rate fluctuations into account(note the $ and £ signs in your examples!).

Odd how exchange rates are a big factor in pump prices when there is a need to keep consumer prices high, yet pump prices didn't plumit when the exchange rate benifitted the consumer.

Silly me! How could I have been that stupid! The dollar price wasn't a factor then as the petrol companies told us that it didn't have an effect with the proportion of our fuel being supplied from domestic sources.

[LukeBird]

Let's see how much we get screwed over now, eh?

[chippy17]

$104 at present

[LukeBird]

chippy17 said:

$104 at present

Not for October Delivery it isn't.
It's $120.92 for Oct del.
$107.45 for Nov del and
$106.85 for Dec del.

[youngsyr]

mat205125 said:

youngsyr said:

Shnozz said:

Given that petrol at the pumps is yet to fall to display the recent drop in oil prices...does this mean that the pump price will go up regardless?

Oil last year at $95 a barrel = £0.89 at pumps
So oil at $135 a barrel = £1.20 pumps
Oil dips to $95/barrel = £1.10 pumps
Oil goes back to $135 a barrel = £1.40 at pumps

eh?

Don't forget that you need to take exchange rate fluctuations into account(note the $ and £ signs in your examples!).

Odd how exchange rates are a big factor in pump prices when there is a need to keep consumer prices high, yet pump prices didn't plumit when the exchange rate benifitted the consumer.

Silly me! How could I have been that stupid! The dollar price wasn't a factor then as the petrol companies told us that it didn't have an effect with the proportion of our fuel being supplied from domestic sources.

The septic tanks have been moaning for literally years about the increase in the price of "gas" from $1 to 3 times that amount.

We have been sheltered from the worst of the increase in price of petrol by the strong £:US exchange rate. That exchange rate has detiorated significanlty in the past 6 weeks or so, which happens to correspond with the fall in the $ price of fuel. Hence we haven't benefitted from the full drop in the $ price of fuel.

That's not to say that the fuel industry in the UK isn't profiteering by being slow to react to price change though, but you can't ignore it as a factor.

[RobCrezz]

Welshbeef said:

Yet another nail in the big petrol engines coffin IMHO.
Dag dags here we go.

[Logie]

Funny thing is, guy popped into the office today who works in the oil industry. I asked him about the price and he said that Nigeran pipeline had be closed and the other main line COULD be closed due to trouble with the locals and terrorism.

If they close the other, no oil will be comming from the Africa, one line was closed the other night. Quite often he said, locals drill in to get oil for cooking and heating.

Also told me a story from 2-3 years ago, when 400 locals where killed as they tapped into an oil line that was carrying something like refine crude which is flamable... Well you can guess what happened!

[anonymous-user]

mat205125 said:

youngsyr said:

Shnozz said:

Given that petrol at the pumps is yet to fall to display the recent drop in oil prices...does this mean that the pump price will go up regardless?

Oil last year at $95 a barrel = £0.89 at pumps
So oil at $135 a barrel = £1.20 pumps
Oil dips to $95/barrel = £1.10 pumps
Oil goes back to $135 a barrel = £1.40 at pumps

eh?

Don't forget that you need to take exchange rate fluctuations into account(note the $ and £ signs in your examples!).

Odd how exchange rates are a big factor in pump prices when there is a need to keep consumer prices high, yet pump prices didn't plumit when the exchange rate benifitted the consumer.

Silly me! How could I have been that stupid! The dollar price wasn't a factor then as the petrol companies told us that it didn't have an effect with the proportion of our fuel being supplied from domestic sources.

Exactly, it's utter BS.

[IainT]

Time to stop buying fuel in $ and buy in in good old GBP or even euros.

[cowellsj]

This may sound a bit thick, but why do we have to have these kind of spikes, to me they seem to be damaging to people within the supply chain and the customers at the end, no one knows what's around the corner pricewise.
Can't someone hold reserves and iron out these spikes so it's not up and down all the time?

[RickH]

Logie said:

Funny thing is, guy popped into the office today who works in the oil industry. I asked him about the price and he said that Nigeran pipeline had be closed and the other main line COULD be closed due to trouble with the locals and terrorism.

If they close the other, no oil will be comming from the Africa, one line was closed the other night. Quite often he said, locals drill in to get oil for cooking and heating.

Also told me a story from 2-3 years ago, when 400 locals where killed as they tapped into an oil line that was carrying something like refine crude which is flamable... Well you can guess what happened!

There was an oil spill that ignited due to a bulldozer ( http://www.cnn.com/2008/WORLD/africa/05/15/nigeria...)
and there was a bigger one in 2006 that you mentioned, it was carrying gasoline ( http://news.bbc.co.uk/1/hi/world/africa/4767033.st...)

This is in no way unusual and quite often is not reported to the outside world, but the numbers are regular:

December 2007: At least 40 people killed in Lagos
December 2006: At least 250 killed in Lagos
May 2006: At least 150 killed in Lagos
Dec 2004: At least 20 killed in Lagos
Sept 2004: At least 60 killed in Lagos
June 2003: At least 105 killed in Abia State
Jul 2000: At least 300 killed in Warri
Mar 2000: At least 50 killed in Abia State
Oct 1998: At least 1,000 killed in Jesse

My father used to work in Nigeria, and did have the situation where locals trying to 'develop' a compensation event due to spilled oil, hacked into a pipeline with a pick-axe thinking it was an oil pipeline. They had accidentally chosen a natural gas line instead. Nothing but the pick-axe head was found.

These companies have many wells (manned and unmanned) and if one is attacked then they isolate it and continue production from the others. If the main distribution pipeline is hit, then it's a different ball park. Nigeria has vast reserves, but I think that this is not a new situation and will continue independent of the oil price in the international markets. After all, these spills/closures were happening well before the price started to rise.

RickH

[spoonoff]

Oil prices are decided behind closed doors by large companies. It is pure profiteering, based on the way the futures market works. The price of oil spikes to say $200 per barrel, investors buy it but only pay about 10% of the cost, sell it for $200 a barrel, then oil price drops again and they pay off the balance at $110 a barrel, $81 profit per barrel.

So the price of oil has to rise and fall so speculators can line their pockets.

Price at the pumps is due to this combined with the fact that the petrol companies are profiteering too, when there is a spike they put prices up instantly, then when price drops they drop them very, very slowly. Profits up over 500% in the last 12 months attest to this.

Basically, we all need to stop whinging and buy some shares- there has never been a better time...