From Michael Bagley Oil Price.Com.....
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 last week at an OPEC meeting 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 load a day. OPEC is also concerned about the dollar because as the dollar weakens, prices go up. They're not paying any attention to production discipline.
The Dollar Index, which tracks the currency against those of six U.S. trading partners, has dropped 6.1 percent in the past month. The nominal value of OPEC's net oil export revenue will be $818 billion in 2011, 10 percent more than this year, according to U.S. Energy Department forecasts. 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 last week 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 that $70 to $85 is the "most comfortable" range, while his Algerian counterpart, Youcef Yousfi, said between $90 and $100 is "reasonable." Speculation that the Federal Reserve may further loosen monetary policy through so called quantitative easing has weakened the dollar. Fed Chairman Ben S. Bernanke said today the central bank may expand asset purchases because inflation is too low and unemployment too high in the U.S. OPEC kept its production target at 24.845 million barrels a day at its meeting last week. 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.
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In the meantime, As more details seep out about the European Union crisis meetings last April regarding Greece and the future of the euro, the key role of European Central Bank President Jean-Claude Trichet in hammering out the compromises to stabilize the situation has become clearer. It also has made the picking of his successor that much harder. Trichet, whose term expires next year, has always been the ultimate fixer. He cut his first policy teeth in the 1980s as director of the French Treasury and head of the Paris Club, where he steered government debtors through the Latin American debt crisis of that period.
But he also put on central bank gravitas as head of the Banque de France and gained sufficient credibility to be acceptable to the Germans and other conservative northern Europeans as the second president of the Frankfurt-based European Central Bank. Trichet's eight-year term is due to expire in November 2011, and the jockeying for his succession is already well under way. For more insightful analysis on ECB moves, I encourage you to read further below where my colleague, Darrell Delamaide, has offered his insights as to who the players on the board are for the next president of the ECB.
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