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Oil Prices Fall on Saudi Announcement

Posted June 9, 2008

“Al-Naimi has pumped hope back into the system after last week’s inflation terror hit the markets. Oil prices closed at $134.39 on the New York Merchantile Exchange.” — Stephanie Grimmett

by Stephanie Grimmett

Baltimore – (TFN): Well, at least oil prices are sensitive in both directions. Saudi Arabian oil minister Ali al-Naimi called for a conference of oil producing and consuming nations (uh, wouldn’t that be everyone?) to deal with record oil, and prices promptly dropped more than $4 today.

That still leaves us with a net gain of $6.56 per barrel if you add Friday’s gain to today’s loss. And who knows if the Saudis are really willing to do anything about the oil situation.

As a sign of good faith, Saudi Arabia has ramped up production, and it will offer larger supplies to all of the oil companies it deals with, which is a nice, effective way of passing the blame for inflated prices onto Big Oil, while still reaping the profits.

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Either way, al-Naimi has dropped hope back into the system after last week’s inflation terror hit the markets. Oil prices closed at $134.39 today on the New York Merchantile Exchange, which looks gruesome, until you see the $139.12 it closed at on Friday.

The dollar is up slightly today, another factor pushing oil down, and everyone managed to ignore OPEC President Chakib Khelil’s snippy remarks about the U.S. single-handedly causing oil prices to move above $70 per barrel.

Khelil told the state-run Algerie Presse Service that, “The economic crisis in the U.S. caused the dollar to drop sharply and the threats against Iran heightened geopolitical tensions.” So, yes, forget the fact that China and India are consuming ever-increasing amounts of oil and gasoline and just blame the big guy.

Of course, it’s always nice to hear dissenting remarks from within the OPEC nations.

Whether the $4 slide is sustainable, we’ll have to wait and see. The fall isn’t enough to constitute a new trend downward. But maybe if we can get everyone in the same room, like al-Naimi suggests… No that’ll just end in bloodshed.

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Posted by Stephanie Grimmett · Filed Under Oil and Energy 

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