April 28, 2008- OPEC President says If the U.S. dollar
strengthens by 10 percent, it is probable
that (oil) prices will fall by 40 percent."
OPEC President Chakib Khelil does not rule out oil prices reaching $200 a barrel,
even though supply is adequate, because the market is driven by the dollar's slide,
Algerian government newspaper El Moudjahid reported.
"Questioned about a possible rise which would go to $200, the minister did not rule
out this eventuality,
explaining that this rise is indexed from now on to the fall in the dollar or to the rise
in the dollar,"
El Moudjahid reported.
"In terms of fundamentals, stocks are high, demand is easing, supply is satisfactory.
Therefore normally,
without geo-political problems and the fall of the dollar, the prices of oil would not be
at this level,"
he was quoted as saying.
Khelil, a former World Bank official, is also Algeria's Minister of Energy and Mines. He
added:
"The prices are high due to the fact of the recession in the United Sattes and the
economic
crisis which has touched several countries, a situation which has an effect on the
devaluation of the dollar,
and therefore each time the dollar falls one percent, the price of the barrel rises by $4,
and of course
vice versa," he was quoted as saying in brief remarks to journalists.
He added that: "If this (the dollar) strengthens by 10 percent, it is probable that
(oil) prices will fall by
40 percent." If the U.S. economic situation improved from now to the end of the year
"that would help the
market to stabilize." "But I don't think that an increase in production would
help lower prices, because
there is a balance between supply and demand and the stocks of gasoline in the United
States have
recorded a surplus and are at their highest level for five years."
The independent El Watan newspaper reported Khelil as saying that if the dollar's value on
currency
markets stayed as it was at present, then oil prices would be expected to remain at
between
$80 and $110 a barrel.
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April 30, 2008 Stocks slightly added to gains after the Federal Reserve lowered its key
interest rate by a one-quarter percentage point to 2 percent. U.S. and European stocks
rose and oil fell after economic data painted a surprisingly resilient picture of the U.S.
economy. Oil fell below $114 a barrel for the first time in almost two weeks after
a U.S. government report showed stockpiles rose more than expected in the world's top
energy consumer. The data on gross domestic product, business activity and employment also
helped keep dollar sentiment positive by suggesting the Federal Reserve may not have to
cut interest rates again, for awhile. A halt in the Fed's rate-cutting campaign would slow
the erosion of the dollar's appeal for global investors and curb upward pressure on
dollar-denominated commodity prices.
In addition to lowering rates to spur the economy, the central bank has rolled out a
series of emergency steps to pump billions of dollars of liquidity into financial markets
to beat back a credit crunch. Policy makers will debate a new liquidity tool paying
interest on bank reserves.
The Fed's rate cuts have led to a weakening in the U.S. dollar that has pushed import
prices higher, adding to inflation pressures. This is the seventh reduction in the federal
funds rate since the central bank began battling against the credit squeeze and the
growing possibility of a recession last September. The Fed delivered two
three-quarter-point moves and one half-point cut over an eight-week period from
mid-January to mid-March that represented the central bank's most aggressive rate cuts in
a quarter-century.
Oil and Dollar News Update April 2008 |
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