hartleys begins coverage on amadeus buy, page-19

Oil up 10% overnight on falling US$
below is an article i found on forecast demand

Oil: Prices jump 10 per cent overnight
New 8:47AM Friday Dec 12, 2008

HOUSTON - Oil prices rose 10 per cent overnight as the US dollar continued to lose value, making commodities like crude more attractive.

The falling dollar outweighed a new report from the International Energy Agency, which said energy demand is sliding sharply.

Crude prices have begun to rise before next week's meeting of Opec, which is expected to slash production.

Light, sweet crude for January delivery rose US$4.34 to US$47.86 a barrel in trading on the New York Mercantile Exchange.

Oil prices have fallen 70 per cent since peaking at US$147.27 in July. After hitting US$40.50 a barrel last week, some oil traders believe that if the market has not bottomed out, it is close to doing so.

Congress also appeared closer to approving US$14 billion in loans to Detroit's automakers, lending further support to crude prices.

"Probably the biggest factor right now is financials," said Phil Flynn, an analyst with Alaron Trading Corp. "The market is worried that all these bailouts ... means we're going to be printing a lot more money, which makes the dollar weaker. That's really supporting the price."


the US dollar lost ground against other major currencies, making commodities like oil more attractive to investors as a hedge against inflation and dollar weakness.

The euro rose to US$1.3227 on Thursday from US$1.2988 late Wednesday in New York, while the dollar fell to 91.18 Japanese yen from 92.63 yen in the previous session.

The Paris-based IEA said today that global oil demand will shrink this year for the first time since 1983. The IEA cut its forecast for global oil demand in 2008 by 350,000 barrels a day to 85.8 million barrels a day, down 0.2 per cent from 2007.

The IEA also cut its forecast for global oil demand in 2009, saying it would increase by just 0.5 per cent next year, to 86.3 million barrels a day. That was 200,000 barrels a day less than its estimate last month.

But Flynn said the report wasn't totally bearish.

"It kind of kept China demand fairly steady, so I think in a weird way the report was kind of bullish," he said.

Focus has remained on comments coming from the Organisation of Petroleum Exporting Countries, which accounts for about 40 per cent of global crude supply. The group has signaled it plans to slash output quotas at a meeting Dec. 17 in Algeria.

Many analysts expect production cuts of as much as 2 million barrels a day, which would match the combined reductions of two previous output cuts earlier this year.

- AP
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IEA says 08 demand down by a lowly 0.2% and forecast demand to rise by 0.5% in 09
Throw in OPEC production cuts and as far as i can tell demand/supply Net overall has changed very little yet POO has fallen nearly 70% since its peak less than 6 months ago.
Happy to hear alternate views but it seems to me that fall in POO largely due to rise of $US (which one suspects will reverse sharply in 09), evaporation of 'hot' speculative money and Fear of demand slump which isnt borne out in the data.
I have seen OPEC members quoted as saying they believe $75 is considered to be a "fair" price for oil, more production cuts expected next week.