Saudi Arabian Oil Minister Ali al-Naimi said a summit of oil producers, consumers, companies and other energy officials in his country this month will find a solution to "stabilize" oil prices he argues are "unjustified" by supply/demand fundamentals, Bloomberg News reported Friday. Oil traded lower early Friday on al-Naimi's summit comments, falling $2.30 to $134.44 per barrel.
Saudi Arabia has invited the United States, United Kingdom, China, Germany, India, and Japan, among other nations, as well as dozens of energy officials and analysts to the June 22 meeting in Jeddah, Reuters reported Friday.
Saudi Arabia, the world's top oil exporter and holder of the largest proved oil reserves, is an influential member of OPEC. Throughout oil's record price rise, OPEC has argued that the oil market is well supplied, with no shortages, and that other factors - - the weak dollar, geopolitical tensions, and above all, investor speculation -- not supply -- has kept prices higher than what the supply/demand balance would dictate.
Others disagree, arguing that global oil inventories, which are in the lower-half of a 5-year average, and the small safety cushion -- the difference between daily global oil supply and demand -- are two objective data points that explain high prices. Oil hit a record high of $139.12 per barrel on June 6, 2008. Oil is up more than 100% in 2008 and more than 400% since 2000.
Further, on Friday OPEC reiterated its statement regarding supplies: the cartel reduced its forecast for 2008 global oil demand growth for the third time this year, Reuters reported Friday. OPEC cut its forecast by 60,000 barrels per day and now believes global oil demand will increase by 1.1 million barrels per day.
Oil Analysis: Few expect OPEC to announce a major increase in production at the June 22 summit, but if the consuming nations can agree to commit more money to both research and producing alternative fuels, and if OPEC can announce a modest increase in production, the summit may -- and it's important to underscore may -- have a cooling effect on prices. Longer-term, to quell prices, the industrialized world, including China and India, have to continue to become more energy efficient on all fronts (vehicles, homes, businesses), given the increased number of energy users stemming from globalization/the development of markets.
Closing Bell: Dubai sends jitters throughout the market (S, BBY)
Heinz looking good after the second quarter?
Why isn't Bank of America updating its shareholders on CEO situation?
