http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/31/cnopec131.xmlOPEC oil ministers say they are powerless in the face of many factors driving up the price of crude, with one member of the producers' cartel warning that the 'market is out of control'.
Mohammed bin Dhaen al-Hamli, president of Opec, told a conference in London yesterday that record oil prices are the result of speculative investment and international political tensions. "We are of course concerned about high oil prices," he said. But "the market is increasingly driven by forces beyond Opec's control".
However, there were signs yesterday that the inexorable rise in crude prices could be about to ease, with the cost of a barrel slipping on news that Mexico had increased production and investment bank Goldman Sachs saying that it was time for investors to "take profits".
Mr al-Hamli said that Opec, whose members supply about 40pc of the world's oil needs, was "monitoring" the situation and would increase output if necessary. "If the market needs more oil, we will supply it," he said.
But he added that the oil price, up 34pc since mid-August, was the result of geo-political tensions and speculation by traders. Mr al-Hamli did not refer to specific situations, although analysts have pointed to recent problems on the Turkey-Iraq border and speculation by hedge funds as fuelling recent price rises.
Another oil minister, Qatar's Abdullah al-Attiyah, pleaded: "Please don't blame us for $93 oil... The market is out of control." He said that the oil market is "very confused", but added that this had nothing to do with an imbalance between supply and demand, but to factors outside Opec's control.
However, major energy users believe one solution to the current problems would be for Opec to open the taps. "If oil is going up, keeping at this level may hurt the economy, especially nonoil-producing developing countries," said Nobuo Tanaka, executive director of the International Energy Agency, which advises large oil-consuming countries.
advertisementThe head of the US Energy Information Administration, Guy Caruso, said: "Our view continues to be that the market is fundamentally tight. We think that the market still needs more barrels as we head out into the next year or so."
US oil futures fell by $3.02 to $90.51 a barrel yesterday, after hitting a record high of $93.80 in the previous session. In London Brent fell $2.40 to $87.92, down from Monday's peak of $90.49.
Oil analysts at Goldman Sachs, which in July predicted that oil may reach $95 a barrel, told investors yesterday that it was time to "sell" oil. :grr:
SEC EYES GOLDMAN SACH'S GOOD FORTUNE
By JOHN CRUDELE
http://www.nypost.com/seven/10312007/business/sec_eyes_goldman_sachs_good_fo.htmOctober 31, 2007 -- THE Securities & Exchange Commission is looking into whether Goldman Sachs cheated its way to enormous profits - even as the rest of the financial industry was suffering through a massive downturn.
The central issue, as best I can determine, is whether Goldman had any insight that other firms didn't have during the May and June period when subprime mortgage securities were deteriorating in value.
In June, brokerage firm Bear Stearns was one of the first firms to shock Wall Street when two of its hedge funds reported massive losses on risky mortgage loans.
Since then a number of other investment firms have reported similarly dismal results.
The bad news culminating in the last two weeks with a massive $8 billion write-off by Merrill Lynch that led to the ouster of its chairman, Stanley O'Neal.
One person who discussed the matter with the SEC says the investigator seemed curious as to whether the investment banking side of Goldman's business could have tipped off the trading side of that brokerage firm to the extent of the problems that would soon be encountered by Bear and others.
And there also seemed to be a philosophical discussion as to whether that would constitute insider trading even if there was such a leak. The SEC doesn't comment on any investigation it might be undertaking. My sense is that the SEC's interest is preliminary.
If someone had known the scope of the subprime mortgage mess ahead of time he could have profited handsomely.
During a second quarter that saw most of Wall Street take it on the chin, Goldman scored an 88 percent jump in profits to $2.85 billion.
By comparison, Lehman Brothers' earnings were down 2 percent, Morgan Stanley's profits fell 8 percent and Bear Stearns' net was off 62 percent.
In its quarterly financial statement Goldman said "significant losses in non-prime loans and securities were more than offset by gains on short mortgage positions."
In other words, Goldman made some very lucky trades to avoid the fate of the others.
The same person who spoke with the SEC's New York office said the commission also seemed interested in the relationship between Goldman and The President's Working Group on Financial Markets.
People who follow the actions of The Working Group, which is nicknamed the Plunge Protection Team, assume that it was the organization that rallied the banking industry behind a recent plan to rescue banks endangered by the subprime mess.
They also assume that much of what The Working Group accomplishes is done through Goldman, where Treasury Secretary Hank Paulson had been chairman before heading Treasury.
Paulson is the former chairman of Goldman Sachs, as was Robert Rubin, another former Treasury secretary who is currently a highly paid executive with Citigroup.
Citigroup also had problems with subprime lending that's gone bad.
Goldman didn't return my telephone call asking for a response.
john.crudele@nypost.com
GOOD!
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