Oil Trades at $74 on China Economic Tightening, Saudi Concern

Oil was little changed at $74 a barrel after China sought to temper its economic expansion and a Saudi adviser said the U.S. aims to cut oil imports. China, the world’s second largest oil consuming country, ordered banks to set aside more deposits as reserves for the second time in a month on Feb. 12, signaling slower economic growth and reduced energy demand. Saudi oil ministry adviser Mohammad al-Sabban said today the U.S. is promoting nuclear power as a means of cutting oil imports.

“The market is a bit uneasy about the Chinese tightening,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. China is not “yet the largest importer; it’s not yet the largest consumer region. Still, it is one of the most important ones.” Crude oil for March delivery traded at $74 a barrel, down 13 cents, at the halt of electronic trading for the contract on the New York Mercantile Exchange at 1:15 p.m. Trading resumes at 6 p.m. New York time. There is no floor trading today because of the U.S. Presidents’ Day holiday.

The dollar advanced to $1.3601 against the euro, from $1.3632, as of 3:15 p.m. in New York. The Dollar Index, a six- currency gauge of the greenback’s value, rose 0.14 percent to 80.366. A rise in the value of the dollar curbs demand for commodities as an alternative investment. “What we would be looking for in the next week is how the U.S. dollar is going to behave,” said Harry Tchilinguirian, head of commodity derivatives research at BNP Paribas SA in London. “You are going to be looking at how the dollar is going to behave against a number of currency pairs”....Read the entire article.


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Saudi Arabia Preparing for oil Demand to Peak

A top Saudi energy official expressed serious concern Monday that world oil demand could peak in the next decade and said his country was preparing for that eventuality by diversifying its economic base. Mohammed al-Sabban, lead climate talks negotiator, said the country with the world's largest proven reserves of conventional crude is working to become the top exporter of energy, including alternative forms such as solar power.

Saudi Arabia was among the most vocal opponents of proposals during the climate change talks in Copenhagen. And al-Sabban criticized what he described as efforts by developed nations to adopt policies biased against oil producers through the imposition of taxes on refined petroleum products while offering huge subsidies for coal _ a key industry for the United States. Al-Sabban said the potential that world oil demand had peaked, or would peak soon, was an "alarm that we need to take more seriously" as Saudi charts a course for greater economic diversification.

"We cannot stay put and say 'well, this is something that will happen anyway," al-Sabban said at the Jeddah Economic Forum. The "world cannot wait for us before we are forced to adapt to the reality of lower and lower oil revenues," he added later.

Some experts have argued that demand for oil, the chief export for Saudi Arabia and the vast majority of other Gulf Arab nations, has already peaked. Others say consumption will plateau soon, particularly in developed nations that are pushing for greater reliance on renewable energy sources. With oil demand only now starting to pick up after it was pummeled by the global recession, some analysts say consumers may have learned to live permanently with a lower level of consumption.....Read the entire article.

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