Views on commodities and energy
One of the many traditions of the Organization of the Petroleum Exporting Countries is that the holder of the group’s rotating presidency should host one of the group’s policy-setting meetings, typically the last of the year.
While regular conferences at OPEC’s Vienna home are a relatively straightforward affair, taking the group offsite has a tendency to generate major logistical challenges.
Last year, the highest hurdle for journalists attending an Algerian-hosted meeting in Oran was getting a visa to travel there.
This year, a big theme of the Angolan conference taking place on Tuesday in Luanda has been where to stay in a capital of scarce and exorbitantly-priced hotels.
Some of the journalists have resorted to sharing rooms in guest houses, far from the action, meaning a long crawl through the city’s traffic jams before they can get any access to the story they have already flown thousands of miles to cover.
The ministers meanwhile are staying in Luanda’s most opulent and very newest hotel, the Hotel de Convencoes de Talatona, where the biggest concern is that the paint is not yet dry.
It was inaugurated on Friday, just in time to accommodate the ministers in return for some serious petrodollars. Prices range from $600 for a standard single room to $5,000 a night for the presidential suite or $3,500 for one of the hotel’s luxury villas. Across the road, many Angolans live in shacks they have built themselves.
The Muslim holy month of Ramadan has disrupted one of the wackier tasks for OPEC reporters: running around Vienna’s beautiful inner ring road with Saudi Arabia’s Oil Minister Ali al-Naimi, who likes to keep himself and the press corp fit. He often uses the 45 minute walk-cum-jog to give media a background briefing of his view on the oil market as he and the bizarre group of security, aides and reporters trot past the city’s stunning palaces and bemused Viennese on their way to work (or home from a night’s revelling). (Photo: al-Naimi with journalists in Cairo, 28 Nov 2008/Amr Dalsh)
The daylight fast for Muslim delegates and ministers means that most meetings are taking place late at night, making an early morning run less practical. Naimi ran on Tuesday afternoon, accompanied only by security. He didn’t go at all on Wednesday morning, much to the chagrin of the reporters on the early shift. The run is sometimes the only chance for media to get Naimi’s insight. It is a blessing and a curse for reporters on the beat, who have to be up at the crack of dawn to take part but are often rewarded with the biggest oil story of the day. Maybe Naimi figures this time there’s no need for a background briefing. With the oil price where it is, he seems relaxed enough to put it all on the record.
from Summit Notebook:
From the start, "green shoots of recovery" was not necessarily the British government's wisest choice of words and after a few months of being on everyone's lips, has given way to a more lowly metaphor.
Business Minister Baroness Vadera raised the hackles of the political opposition in January when she spotted "a few green shoots" on a day of large-scale job losses and collapsing share prices.
Evidence of economic revival is still elusive, but there are ever louder hints that we have at least seen the worst -- or bottomed, to use the mot du jour.
Bottom as a noun and a verb was widely brandished by speakers attending Reuters Global Energy Summit this week, who based on their analysis on a slight increase in available credit, a tentative pick up in energy demand and rising commodity prices.
OPEC Secretary General Abdullah al-Badri has an interest in spotting the kind of confidence that has driven oil prices up from a low below $35 a barrel in December to almost double that.
"I have no doubt that the recession has bottomed out, but is it a V shape or a U shape?" he asked during a Reuters summit session.
Others were less convinced and the most bearish of them all was a representative of the very oversupplied tanker market, where freight rates have sunk to their lowest levels in decades, with not a green shoot in sight.
"We have seen lower than the bottom," said Erik Ranheim, a manager at oil tanker association Intertanko.
from Summit Notebook:
The United States may fondly dream of independence from imported oil, but it would do well to remember that the traffic is not one way.
OPEC Secretary General Abdullah al-Badri told the Reuters Global Energy Summit he had been hearing for years that the world's biggest oil consumer was seeking ways to avoid importing OPEC oil, but he was confident it would carry on burning fossil fuel for years to come.
"I am of an age when I can tell you I have been hearing this for the last 40 years," Badri said. "We will see another president, with two terms, before we see any change."
He also warned the U.S. it should be careful what it wished for.
"We would like to tell them they buy most of the resources of our member countries. We are sending them back more than 50 percent of that income to OECD countries, and the U.S. is one of them, to buy medicine, equipment, aeroplanes, spare parts, clothes."
"Don't forget the medicine," he added.
The headline that emerged from nearly five hours of weekend talks by the producers’ club OPEC was that it that had decided to leave its output policy unchanged. But you shouldn’t believe everything you read in the press.
OPEC http://www.opec.org/home/cited the fragile state of the world economy and said it was doing its bit to try to nurse the economy back to health by avoiding any aggressive cuts in oil supply.
As far as the wider world could tell, the group, which supplies more than a third of the world’s oil, was united in its concern for its hard-pressed customers, especially the biggest one of all, the United States whose new leader is far more palatable as far as OPEC is concerned than his predecessor.
In reality, the closed-door debate inside OPEC’s scruffy Vienna secretariat on the banks of the Danube Canal, which feeds into the more romantic Danube River, was rather more heated than we were led to believe.
Languishing oil prices and ballooning oil stocks are more worrying for some members of OPEC than others and those most concerned about balancing their books were said to be holding out for radical action to try to drive up the oil market.
Delegates circulating in the lobbies of Vienna’s elegant hotels whispered that far from a straightforward consensus, some members had battled for a supply reduction of anything up to 1.5 million barrels per day.
Kuwait, whose government offered to resign en masse on Monday, and Iran, which faces expensive presidential elections in June, were among those keenest to prop up prices that have fallen by more than $100 from last year’s record high, the delegates said.
But intent on presenting a unified front, ministers chose not to tell the line of reporters waiting outside the meeting about any internal divisions.
The version for the media’s eyes and ears was that a new administration in the world’s biggest energy consumer made it so much easier to bury old enmities and agree with U.S. ally and leading oil exporter Saudi Arabia that for now the best output policy is one that doesn’t send oil prices soaring.
A surprise cut in production from OPEC and Hurricane’s Ike’s looming presence in the U.S. Gulf of Mexico are supporting oil prices above $100 a barrel. Just a daily move? Not to some. On OPEC, UBS told clients: ”We think this is a serious deal for a real cut… In this market, direction matters and this is a turn.”
It’s hard to grasp just what’s behind the volatility in oil prices lately, says Jim Landers of the Dallas News, taking on the Bubble Theory for the $40 a barrel drop in oil prices since July 11. (Pictured above: Havana before Ike hit)