Is It Goodbye To Cheap Oil Forever?

Opec’s president said this week that he would begin consultations with other ministers from the oil cartel on Friday to release an additional 500,000 barrels a day of Opec crude if prices remain high. “If prices continue to increase as it is now, by the end of this week … I will start consultation with my colleagues to release the 500,000 barrels per day,” Sheikh Ahmad al-Fahd al-Sabah of Kuwait said.

The promise had little effect on the markets, however, with analysts remaining unconvinced that Opec has the capacity to ratchet up supply. Instead, dealers are concerned about a lack of refining capacity in the United States – where a new facility has not been built for more than 30 years – the kidnapping of workers in Nigeria and the long-term implications of the jailing of Russian magnate Mikhail Khodorkovsky for output from his firm, Yukos.

Analysts are now openly considering the prospect that high oil prices are here to stay. When the upward movement began in early 2003, it was said that the rise would be reversed as soon as demand cooled and fresh supply kicked in. Charts show, however, an unmistakable trend, with each peak being higher than the last.
The Guardian