When OPEC speaks, Oil Prices Listen… For A Little While At Least
It’s always nice to be on top, but if there’s one hard and fast rule to life, it’s that everything changes. Guaranteed.
OPEC is finding that out the hard way, and they’re fighting back as much as they can. Of course they have good reason to cut back on production when demand is still falling. But that isn’t what this is really about of course.
Instead, this is about something else that, while not quite guaranteed, seems frighteningly accurate. Money makes the world go around, or at least most people think that it does.
OPEC Likes Its Bling
OPEC, for one, definitely feels that way. And as oil futures fall faster and harder with only mild bumps upward hardly fit for the name rebound, they’re beginning to get surly. Even though they’re still making more than they were back two years ago, they’re not happy. And when they’re not happy, they like everybody else to know.
Scheduled to meet in Vienna on Friday about the disturbing - for them, not for us - drop in oil trends, they might just find that they have little sway in how low it goes. The countries that use up the most oil have been consistently reporting negative economic data. With people reacting to that news and the individual realities they face, they’re taking the necessary steps to protect themselves.
In other words, demand at the current oil prices will probably decline further, regardless of whether OPEC cuts production by the 2 million they’re proposing, or whether some smaller amount is agreed on.
Could they make a difference? Of course. That isn’t out of the question at all. But futures traders were largely against such thinking on Monday, as early gains of $2.80 dissipated by the end of the day. It’s bounced around since the beginning of the week, but at day’s end Thursday, it still hasn’t reached the $70.00 mark again.
Here’s what I think. OPEC will make their cuts, oil will jump up, and then we’ll see it slide down again as the next week progresses and some further bad news appears on the headlines.
http://www.smartprofitsreport.com/archives/2008/offshore-oil-drilling558.html
Thursday, October 23, 2008 — by Jeannette Di Louie, Assistant Editor of Mt. Vernon Research
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