Gold edged down on Friday as the dollar firmed against the euro, but trading was quiet as investors awaited the outcome of OPEC’s production meeting this weekend and a spate of data due next week for fresh impetus.

Spot gold was quoted at $810.00/812.50 an ounce at 1310 GMT, down from $814.60 an ounce late on Thursday, as the firmer dollar dented interest in the metal as a currency hedge.

The euro slipped after data showed falling inflation in the euro zone, boosting expectations the European Central Bank will cut interest rates further. [ID:nLS548735]

Falling oil prices are also doing little to help gold, which typically moves in line with crude. Traders are awaiting the outcome of this weekend’s meeting of the OPEC oil cartel, at which production cuts will be discussed. [ID:nSP342706]

“Obviously there is still a correlation between oil and gold,” Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus, said. “If OPEC make a decision which might drive the oil price up, that would also be positive for gold.”

Despite the gold price dip, the precious metal is heading for its biggest monthly gain in nine years as investors spooked by the outlook for the global economy buy into the metal as a haven.

Prices have climbed some $90 an ounce, or 12 percent, this month. Gold is also up 12 percent in euro terms, and 15 percent in terms of the Australian dollar.

“Investment (in gold) is strong because there is huge concern over the economic and financial environment, both in the short and possibly the longer term,” RBS Global Banking & Markets metals strategist Stephen Briggs said.

“The measures being taken to stabilise the situation may lead to inflationary fears down the road, so gold has a double benefit from that.”

Gold is typically seen as a hedge against inflation.

DATA

Traders will also be watching for a raft of economic data due out next week, which could have a significant impact on the dollar. U.S. auto sales are due out on Tuesday, and U.S. non-farm payrolls on Friday.

“Next week, manufacturing indices for all major economies will be released,” Standard Bank analyst Walter de Wet said. “This should indicate the speed at which manufacturing is contracting globally.”

Dresdner Kleinwort said on Friday it expects gold prices to average $870 an ounce this year, falling to $740 an ounce in 2009. For silver, it forecasts an average price of $15 an ounce in 2008 and $9.75 next year.

But Wrzesniok-Rossbach at Heraeus said delegates at a forum on Thursday organized by the precious metals group expected gold prices to hit new highs next year.

“Consensus was that in the long run all the bailouts we are seeing, whether in the car industry, the banking industry or others … will (create) inflation, and that would be positive for gold,” he said.

Among other precious metals, spot platinum was quoted at $860.50/880.50 an ounce, slightly up from $853 late on Thursday. Palladium was at $184/192 an ounce against $187.50.

Silver was at $10.12/10.20 an ounce against $10.31 an ounce.

The industrial precious metals have suffered more from the economic downturn than gold, with platinum and palladium, which are chiefly used in catalytic converters, both dropping significantly from their summer highs.

By Jan Harvey
LONDON, Nov 28 (Reuters)

In fact, Opec has ALREADY been increasing production – and it has had little effect on the oil price. The oil cartel pumped an average of 32.24 million barrels per day (bpd) of crude in May, an increase of 370,000 barrels from the previous month. This is almost half the proposed new hike for next month. This 370,000-barrel increase in May had little effect on the oil price – and I reckon the latest plan will be just as ineffective as well.

I also believe that the Saudis will be pumping close to their limits after this production hike. They will be able to support any short-term increase in production as its Khursaniya oil field is expected to come fully on stream next month. However, the original plan for that field was to ramp up its production slowly, while using the new stream to allow some of the country’s older fields to rest.

Also, the field was expected to start pumping oil in 2007, but only started producing in 2008 because of technical delays. And even then, it was expected to produce 500,000 barrels per day, but is currently able of producing just 300,000 barrels per day.

So, with the Saudis close to full capacity they may not even manage to increase output by the 200,000 noted by the UN Secretary General. Even if they did – I don’t expect the oil price to fall by much. With world oil consumption currently at around 87m barrels a day, a 200,000-barrel increase represents just a 0.2% increase in production… that’s hardly spectacular, is it?

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Regards,

Garry White
Editor Smart Commodities UK

Source: Saudi’s Fail In Bid To Slash Oil Price: Here’s Why It’s Time To Buy Oil

For almost five decades, Indonesia held a unique position as the only Asian member of the OPEC oil-exporters’ cartel. When it joined OPEC in 1962, it was Southeast Asia’s undisputed energy giant. But yesterday marked the end of an era for the country. Indonesia has formally withdrawn from the oil cartel.

You see, the country’s oil production hit a peak in 1976. And In the early 90’s it was still producing about 1.7 million barrels per day. But ageing oil fields and a lack of investment has seen falling production since 1995. The country now produces about 800,000 barrels per day and it’s been a net oil importer since 2005. Its days in OPEC were obviously numbered.

It’s big news in the oil industry, but I think that the country’s withdrawal from OPEC is really a bit of a non-event — at least from an investor’s point of view. Indonesia is still a major energy exporter. The country is the world’s biggest exporter of thermal coal, which is widely used in the power sector. It is the world’s second biggest exporter of liquefied natural gas (LNG) after the Gulf state of Qatar. And it has recently overtaken Malaysia as the world’s biggest producer of palm oil as well.

Global oil demand is expected to increase by 1.03 million barrels per day this year. And about 70 per cent of that additional demand is going to come from Asia. But it’s not just oil. Asia’s growing economies are fuelling demand for just about all forms of energy. And Indonesia is well placed to profit from it.

Coal is gold…

The country is sitting on about 90.5 billion tons of coal. And demand for the stuff is surging. In fact, Indonesian companies are now selling coal to Japanese buyers at double last year’s prices. So, investors have been flooding into the sector. Indonesia’s biggest coal miner, Bumi Resources, has seen its share price soar by about 431 per cent in the last year. Its market cap is now $16.4bn

Now the country’s second and third biggest coal miners are planning on floating on the markets as well. Number two producer, Adaro Energy, is planning a Rp12,000 billion ($1.3bn), public offering. That will make it the biggest IPO in Indonesia’s history. And it’s going to be the world’s 8th biggest IPO this year.

Adaro has already pulled in top international investors. 64% of the company is controlled by two Indonesian strategic investors. But 36 per cent of the shares are owned by major global investors, including Goldman Sachs, Citigroup and the Government of Singapore Investment Corporation.

And demand for the IPO has been huge. In March, the company announced that it planned to raise $500 million. Then, earlier this month, they raised that to about $1 billion…and then $1.3 billion…

The Adarco IPO is scheduled for next month. The country’s second biggest coal miner Indika Inti Energy plans on raising $300 million through selling an 18 per cent stake in an IPO shortly before the Adarco float. Both these IPOs are probably going to do well. Investors and speculators who missed out on Bumi Resources’ rally will probably try to get in early this time… a move I see as being quite sensible.

Bumi Resources is one to watch…

The two new coal IPO’s might take some of the wind out of Bumi’s sails. And if we see that happen, a fantastic buying opportunity will present itself.

Just consider: China is building new coal-fired power plants at a rate of about one per week! And then there is India. Asia’s other giant plans on adding more than 400,000 Megawatts of new capacity by 2030 — and the bulk of that is going to be powered by coal. So, the coal story still has a long way to go. In the months to come there could be moves to be made… and a second chance for anyone who missed out the first time around.

I’ll keep you posted.

Regards

Manraaj Singh
Profit Hunter
Editor

PS If you liked what you read here — you can become one of my regular subscribers and receive all our new Profit Hunter recommendations the moment we make them.

Source: Careful Timing Could Mean Big Profits From The Worlds No.1 Coal Exporter

Energy Minister Purnomo Yusgiantoro announced today (Wednesday) that he would sign a decree officially withdrawing Indonesia from OPEC when its membership expires at the end of 2008.

A member since 1962, Indonesia’s exports have been waning for years due to aging oil wells and a lack of infrastructure investment by the government. Oil production is down 49% from its 1977 peak. The country has now become a net importer of oil, Purnomo said.

“If production comes back to give us the status of net oil exporter then we can go back to OPEC,” Purnomo said, speaking before the Jakarta Foreign Correspondents Club today, Bloomberg News reported.

Indonesia’s withdrawal from OPEC will help the Asian nation save an estimated $3.1 million (2 million euros) in membership fees per year, Purnomo noted.

The country has more than 4 billion barrel in proven reserves, according to the AFP. However, Indonesia’s production has been dropping steadily since 1995. So while other OPEC member nations have been benefiting from high oil prices, Indonesia has suffered as it has been forced to import oil.

“If OPEC had more solidarity with its members and helped those like us who are suffering from the current high prices, it would have been a different matter,” Indonesia’s Parliament energy committee chairman Agusman Effendi told the AFP.

Indonesia’s daily oil output has fallen to 927,000 barrels per day (bpd) this year, down from 950,000 barrels a day in 2007. Its daily output falls short of the nation’s daily consumption of approximately 1.2 to 1.3 million barrels per day, according to Reuters UK.

The Indonesian government heavily subsidizes retail oil sales to the tune of almost $13 million per year. But due to rising costs, the government has had to enact unpopular fuel price increases, which have sparked civilian protests.

Oil’s Bubbling Higher

Oil reached a record high of $135 per barrel on May 22, but since then the price has dropped.

Oil prices have been volatile today. At 1:48 p.m., oil for July delivery was trading at $131.28 a barrel on the New York Mercantile Exchange. Earlier, however, crude oil traded down as low as $125.96 today, according to Bloomberg data.

But the slight reprieve we’re currently experiencing is likely to reverse itself just as quickly as we head into the summer driving season and speculators continue to drive up the price of “black gold.”

Both Goldman Sachs Group Inc. (GS) and JP Morgan Chase & Co. (JPM) recently released reports that have oil soaring over $200 a barrel within the next two years.

Money Morning Investment Director Keith Fitz-Gerald – one of the first investment gurus to predict triple-digit oil prices – has boosted his own target, suggesting that oil could go as high as $225 a barrel.

“The math is really simple here,” Fitz-Gerald said in a recent e-mail interview from China. “We are burning through supplies at a rate that’s four times to five times faster than we’re discovering new reserves. Throw in a few [surprises]… perhaps a terrorist event… and add in the accelerating use of oil and gasoline in Third World countries, and we have the recipe for far higher prices.”

Source: Indonesia to Withdraw from OPEC Due to High Oil Prices

This is the view of the group’s secretary-general, Abdullah al-Badri, expressed on Saturday during a visit to Iran.

“Oil supply to the market is enough and high oil prices are not due to a shortage of crude but rather it is because of the decrease in the dollar’s value, shortage of refinery capacity and some political tensions in the world,” said a-Badri, according to the Iranian state news agency.

According to Reuters, his views are in line with those of OPEC officials in Iran, the second-largest producer in the 13-member cartel.

US oil futures headed towards $108 a barrel today following al-Badri’s statement.  Reuters reports that “light sweet crude for May delivery rose $1.31 cents to $107.54 a barrel by 1035 GMT (6:35 a.m. EDT) after leaping $2.40 a barrel on Friday, recouping all of the week’s earlier losses.”

“Oil prices could hit $160 a barrel as soon as next week,” says Dominic Frisby in The Daily Reckoning UK.

“At least, that’s what ‘Zapata’ George Blake, the Texan oil analyst, reckons. ‘Zapata’ George has a habit of making bold calls that often seem to be proved right. He thinks there’s an imminent supply squeeze ahead, which will cause the oil price to spike. Daily consumption is exceeding daily production, he says.”