OPEC announces YTD cut of "4.2M bpd"

[Incinerator]

http://www.bnn.ca/news/5554.html

actual additional cut from Dec 17 meeting: 2.2M bpd

29.045 M bpd to 24.845 M bpd effective January 1, 2009

[Claeren]

Except it is just words, the market will not fall for bluffs anymore and unless OPEC can (1) get their members truly on board for the cut and/or (2) get Russia at least partially on board it doesn't matter and after a short plateau prices will keep dropping.





Claeren.

[Slava]

Russia wants the price of oil to rise though. A lot of countries need the price to increase as they fund their domestic economy with the proceeds.

[Claeren]

^ Exactly, I agree, thus the problem.....

Because prices only rise when supplies drop relative demand (and the exact opposite thing is happening right now, falling demand and at best flat supply). Russia (and OPEC members) NEED to keep pumping oil regardless of what rhetoric OPEC throws out to the press.

Thus the price will keep dropping until demand picks up again relative to supply.



Claeren.

[Slava]

^ Doesn't a production cut accomplish the same thing? If not then what am I missing here?

[mykalberta]

Is there a graph anywhere of Opec country oil production?

I have always wondered if this is complete BS or not.

[Nancy]

http://www.infoplease.com/ipa/A0922041.html

[burn_this_city]

Guess we havent hit peak oil yet..

[Claeren]

Exactly.

For example:

ACTION:
OPEC saying they are cutting millions of barrels of production.
RESULT:
No actual barrels of production cut - supply grows/prices drop

ACTION:
OPEC members actually cut millions of barrels of oil.
RESULT:
Supply drops and prices stablize or rise, but OPEC members citizens freak out when they no longer get government services and governments collapse because they are getting $45/b instead of $150/b AND are selling 3M less barrels per DAY.


ACTION (Their old compromise between the first and second actions):
OPEC says they are cutting 3M barrels but actually cut 1M barrels.
RESULT:
Supply starts to drop a bit leading purchasers to overpay, fearing high future prices due to stated 3M barrel cut. OPEC members get more money than they should for each barrel, benefiting both from a higher price and those secret 2M additional barrels of oil EXCEPT now Russia has the capacity to raise production 1M barrels -- quickly pushing prices back down but also permanently stealing market share from OPEC members.


As OPEC has lost its hold on the market and Russia has become a major producer there is so little that OPEC can do without Russia also playing along AND OPEC actually doing what they say they are doing.

The days of bluffing the market into a rise are gone.




Claeren.