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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (41820)	9/19/2005 1:05:56 PM
From: Wyätt Gwyön	Read Replies (1) of 110194

apparently buying into Land of Oz OPEC production increases? what are the production increases but a fig leaf? they are already producing flat out. Saudi Arabia can only offer more sour crude which not enough refineries can handle. as suttree posted a few days ago: SAUDI ARABIA is struggling to sell its crude oil despite record fuel prices and calls on the Kingdom to bring further supplies to the market. Saudi Aramco, the state oil company, has been forced to offer ever-greater discounts to tempt refiners to buy its product, which is shunned for its high sulphur content. The official selling price for Saudi oil for October delivery is currently set at a discount of more than $13 per barrel to US light crude which was yesterday selling for just under $65 per barrel. Weak demand for Arab Light, the main Saudi crude blend, has forced the Kingdom to increase the discount from $10.45 in August to $13.40 in October. Evidence of the weak demand for Arabian and other high sulphur crudes is likely to increase the tension between Opec leaders and Western governments over the cause of the high petrol prices. Leo Drollas, of the Centre for Global Energy Studies, reckons that Saudi Arabia may not have cut its price far enough. “Despite $60 oil, there is a lot of crude sloshing about in the market,” he said. Refiners seeking to make high specification petrol and diesel tend to prefer low-sulphur crudes such as Brent or Nigeria’s Bonny Light. Few refineries are able to convert more of the heavy sulphurous “sour” crudes into petrol and most of those are in the United States. The damage caused by Hurricane Katrina has forced refiners to turn to light North Sea and US crude blends which are already in diminishing supply.

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