Oil price might rise 'reasonably': Saudi king Abdullah
The traditional demand-pull explanation for the link between money growth and inflation now needs to be supplemented with a cost-push story as well.
From the perspective of demand-supply balance, in most sectors it is still a buyers' market, with capacity utilisation levels nowhere near the peaks achieved in the pre-crisis boom.
The massive policy responses to the Financial Crisis by Central Banks and governments all over the world, has pumped enormous amounts of liquidity into the global financial system, without a commensurate increase, as yet, in the demand for funds to finance actual production activity.
Now with Crude Oil prices rising again, the global prospects for ethanol fuel looks bright. The world-wide ethanol consumption is estimated to reach 54 billion litres by 2010, accounting for about 1 percent of world oil consumption (which is estimated to exceed 5151 billion litres by 2010 according to the World Energy Council)....So the shareholders of XL Telecom and Energy Ltd be prepared to see you stock cross Rs.100 within a very short time.
Moreover, the overhang of liquidity is flowing into various channels, including various commodity markets, by way of surging investments in commodity futures. This is going to have a mammoth effect on the price of Crude Oil going forward.
Riyadh: Oil prices are stabilising and might even rise "reasonably" Saudi Arabia's King Abdullah was quoted as saying by a Kuwaiti newspaper.
The top OPEC oil exporter reiterated it saw a fair oil price between $75 and $80 per barrel, King Abdullah told the daily al-Seyassah in an interview.
"We expected at the start of the year oil prices between $75 and $80 a barrel, this is a fair price...Oil prices are heading towards stability and might rise reasonably," he said. On Thursday, US oil crude futuresrose $1.38 to $78.05.
The Saudi economy was in "excellent shape" and the global financial crisis had had only a limited impact on the member of the leading G20 countries, King Abdullah added.
"The Saudi economy is still growing, not fast but without decline. We have a lively economy, be it the government or private sector," he said, adding that foreign investments to the kingdom had risen despite global turmoil.
Saudi Arabia's GDP in real terms edged up 0.15 % in 2009, the finance ministry said on Monday.The Saudi sovereign wealth fund had not been affected by global turmoil, he said, without elaborating. Most foreign assets are managed by the country's central bank.
The 2010 budget, which sees investments rising by 16 % to 260 billion riyals ($69 billion), would have a positive impact on the economy, he said in the interview to be published on Saturday, of which Reuters got an advance copy on Friday.
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