No OPEC Meeting,
Last summer during July and August this same shortfall occurred. The Middle East is requiring more and more hydrocarbons to generate electricity. Natural gas supply has not kept up with demand as power demands increase significantly.
The massive build out in Dubai and other Persian Gulf countries has put a substantially higher demand on electricity. Those skyscrapers need hundreds of tons of air conditioning plus electricity to run the increasing density of computers and lights needed to create the business environment.
Lehman said the coming high demand season would divert more natural gas to power generation and leave less for reinjection into the oil wells. Currently quite a bit of gas is produced with the oil but that gas is reinjected into diversion wells to keep the oil under pressure. As the gas is diverted to electricity generation this pressurization process breaks down.
During the last few years Kuwait, Saudi Arabia and Oman have used rolling blackouts to cope with power shortages.
Lehman boosted their estimates for the average price of oil to $105 in Q3.
On Sunday OPEC said it had no plans to hold an extraordinary meeting to discuss production before September. The group's general secretary said oil supplies are sufficient and there is no need to hike production.
According to OPEC there are 53 days of supply in the system and they are under no pressure to increase supply. The Iranian oil minister Gholamhossein Nozari said OPEC will maintain current production levels in an effort to support the price of oil at $100. The OPEC basket of crude hit the $100 level for the first time last month.
President Bush again asked Saudi Arabia to use its influence on OPEC to raise production. OPEC General Secretary Abdullah al-Badri said "No one can put OPEC under pressure because we decide based on our interests."
Crude prices neared $107 Sunday night after the flurry of OPEC news.