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Some OPEC members want higher oil price as dollar falls
OPEC Members Seek $100 a Barrel Oil as Sliding Dollar Cuts Real Revenue
By Grant Smith
Bloomberg News
Tuesday, October 14, 2010
http://www.bloomberg.com/news/2010-10-15/opec-members-seek-100-a-barrel-...
VIENNA, Austria -- The 13 percent decline in the dollar index since June has led some OPEC members to call for oil to rise to $100 a barrel.
The U.S. currency's weakness means the "real price" of oil is about $20 less than current levels, Venezuelan Energy and Oil Minister Rafael Ramirez said after yesterday's meeting of the Organization of Petroleum Exporting Countries in Vienna. The group, which accounts for 40 percent of global crude output, left targets unchanged and called for greater adherence to quotas, which are being exceeded by a supertanker a day.
"OPEC is not interested in compliance right now," Nordine Ait-Laoussine, the former Algerian oil minister who now runs Geneva-based consultant Nalcosa SA, said in an interview in Vienna. "They're concerned about the dollar because as the dollar weakens, prices go up. They're not paying any attention to production discipline."
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Prophecy Resource Goes Into Production
at Ulaan Ovoo Coal Mine in Mongolia
A commission appointed by Mongolia's Ministry of Mineral Resources and Energy has conducted the final permit inspection at Prophecy Resource Corp.'s Ulaan Ovoo mine site and has instructed the company to begin coal production. Prophecy Resource (TSX.V: PCY) has begun production of its first 10,000 tonnes of coal as a trial run of supply to be taken by rail to electric power stations in Darkhan and Erdenet, Mongolia's second and third largest cities after the capital, Ulaanbaatar. The company is the second-ever Canadian mining company to get a permit to mine in Mongolia and start production there.
For the company's complete announcement, please visit:
http://www.prophecyresource.com/news_2010_oct14.php
The Dollar Index, which tracks the greenback against six major world currencies, sank from its 2010 high of 88.405 on June 7 to 76.80 at 8:40 a.m. in Singapore, and is down 5.8 percent in the past month to the lowest level since December. The nominal value of OPEC's net oil export revenue will be $818 billion in 2011, 10 percent more than this year, according to the U.S. Energy Department forecasts.
OPEC is exceeding its own quotas as prices rise above the $70-to-$80-a-barrel band that Saudi Oil Minister Ali al-Naimi said is "ideal." The International Energy Agency estimated that the group achieved 54 percent of its promised supply cuts in September.
Shokri Ghanem, chairman of Libya's National Oil Corp., said a higher crude price would help OPEC offset the loss of revenue from the weaker dollar.
"We would love to see $100 a barrel," Ghanem said yesterday in Vienna. "We're losing real income. Libya in particular would like to see a higher oil price."
Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said in an interview this week that $70 to $85 is the "most comfortable" range, while his Algerian counterpart, Youcef Yousfi, said between $90 and $100 is "reasonable."
Crude for November delivery fell 14 cents to $82.55 a barrel in electronic trading on the New York Mercantile Exchange, extending yesterday’s 0.4 percent decline. Oil gained 7.7 percent in the past month.
"So far the perfect price has been $60 to $80, and now they're talking about $80 and $100," said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. "This all tells me OPEC is quite happy with higher prices and quite unhappy with the fall in the U.S. dollar."
OPEC kept its production target at 24.845 million barrels a day at its meeting yesterday. Output from the 11 members bound by quotas exceeds the group's ceiling by 1.9 million barrels a day, or about the same as produced by Nigeria or Angola, according to Bloomberg estimates.
While ministers talked of the need for greater adherence, OPEC no longer even publishes the individual national targets. The group quota "is all you need to know," OPEC Secretary-General Abdullah El-Badri said at a press conference yesterday.
The group agreed to a record 4.2 million barrel-a-day cut in production in late 2008 as global demand fell 0.6 percent, the first decline since 1983. Compliance reached a peak of 79 percent in March 2009, based on Bloomberg data.
"The market is well supplied," Al-Naimi said yesterday. "It is an ideal situation we are in now. Nobody is complaining. Consumers are happy, producers are happy. Companies are investing."
Oil consumption worldwide will average 86.9 million barrels a day in 2010 and 88.2 million barrels a day in 2011, the Paris- based IEA said Oct. 12 in its monthly report. That's 300,000 barrels a day more than last month’s forecast for both years.
The IEA raised its estimate of the amount of oil OPEC producers will need to provide to balance world supply and demand. Its new estimate is an average of 29.3 million barrels a day for next year, or 100,000 barrels a day more than the agency’s estimate for 2010.
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Sona Resources Expects Positive Cash Flow from Blackdome,
Plans Aggressive Exploration of Elizabeth Gold Property
On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia.
Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013."
For complete information on Sona Resources Corp. please visit: www.SonaResources.com
