ISSUES....
Inside,
confidential, off the record
Crude oil prices
Our
friend Dennis Garthman continue to be on the ball with "
The Garthman Letter" On Tuesday he wrote is opinion on crudes
prices, and it still holds true for today.
CRUDE
OIL PRICES HAVE FALLEN MATERIALLY as the energy dealing community
is not at all convinced that the most important member of OPEC,
Saudi Arabia, has any intention of joining with the other cartel
members to cut production.
Nigeria wants a cut in the quota; Venezuela and Iran obviously
want a cut in the quota; Indonesia's Oil Minister, Mr. Yusgiantoro
said today that he has received a written request from OPEC's
headquarters for a proposed cut of 1.0 million bpd; Kuwait's Oil
Minister, Mr. Ali al-Jarrah al-Sabah, yesterday suggested that
his nation was interested in cutting the quota by something just
under 1.0 million bpd.... but Saudi Arabia remains quiet and that
makes all the difference. Until Saudi Arabia agrees to a cut,
the rest of OPEC may wail and gnash their collective teeth, but
nothing shall happen and prices shall deteriorate. Note then the
massive widening of the contangoes in both WTI and Brent crude.
Note that the Nov/Dec WTI contango is now out nearly to $2.00
(it is obviously $1.70, but only a month ago today the front/second
WTI contango was $1.10, and the Nov/Dec contango was $.80!), and
note that the July '07/Oct '07 contango is now out to $.88 cents,
from parity only a month ago. There are ample supplies of crude
above ground, and they are being forced to bid for what storage
they can find:
Nov WTI down 225 58.28-33
Dec WTI down 194 60.02-07
Jan WTI down 176 61.28-33
Feb WTI down 166 62.20-25
OPEC's Crude Basket (10/06) $55.13
Henry Hub Nat Gas $5.17/MMBtu
Finally, the situation in Nigeria's southeast, where its oil facilities
are of course centrally located, remains as the folks at the State
Department might say "fluid." That is, Abuja is concerned,
and properly so, that the separatists there shall ramp up their
actions against the oil industry at a moment's notice. Thus President
Obasanjo has made it quite clear that he has no qualms about using
his ample military against the separatists there. The FT this
morning report that "senior security officials" are
preparing elaborate and varied military strategies to protect
the oil facilities in the Port Harcourt region. These same officials
note that they
have no choice but to promote a military "solution"
to the problem, for a political solution has thus far proven impossible.
As one official said, "Protecting national assets is the
role of the national military, [but] not waging war on its own
people." Confusion thus reigns there. It is a tenuous situation
at best, and we fear that this shall end as all such situations
seem to end: with the military fighting the people of the region,
and with the military on the very short end of a very difficult
situation. The separatists will be waging guerrilla war on their
own territory, while the military will be fighting out in the
open and thus quite vulnerable. We have seen this "movie"
before: with England fighting the revolutionaries here in the
US in the late 18th century; with England fighting the Boers in
S. Africa; with the US fighting the Viet Cong; with Russia fighting
the Afghanis and the Chechens; with the US fighting the jihadis
in and around Baghdad.... and it always ends in carnage on both
sides..
You can subscribe to The Gartman Letter
by contacting Dennis Garthman: Phone 757 238 9346, Fax 757 238
9346 or dennis@thegartmanletter.com
ISSUES....
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