OPEC just got kicked in the face!

Discussion in 'Economics' started by peilthetraveler, Dec 17, 2008.

  1. Cut 2.2 million barrels and oil drops below 40 bucks. Man, that must really chap those arabs asses, huh?
  2. On Wednesday, 22 Aug 2007.- Eric Bolling, One of the Nymex largest Natural Trader ever, said on CNBC: "Ignore OPEC-They Cheat"



    Quote from the article.-

    "“I’ve been doing this 20 years and all 20 years they’ve been cheating on their output quotas. They’re cheating on the quota they developed last year for December. They have an output cut for February that they’re probably going to cheat on. It doesn’t matter if they meet again and promise not to cheat , they’ll still cheat.”

    With OPEC so 'reliably unreliable' what should investors be watching. Eric Bolling said “You know what’s more important than OPEC, the price of gasoline. When gasoline doesn’t rally, crude oil’s not going up I don’t care what OPEC says they’re going to do. The last time oil was this price, the gas crack (or the value of the gas price over the value of the crude price) was 50% higher than it is right now. Unless gasoline rallies, crude doesn’t have a shot in the you know where.”
  3. GiantDog


    I hope it goes down to $20 just to piss them off.
  4. 377OHMS


    Sweet. Iran is insolvent below ~$78.

    OPEC hasn't been around long enough to have corporate memory of this kind of demand destruction. Theoretically they could keep cutting production until a higher equilibrium price is achieved but the volume would be diminished. Their cash machine has gone dry for the time being. One has got to wonder if the world might see a bit less state sponsored terrorism with slashed oil revenues in these countries. Hard to pay for the jihadists when you can barely feed your people.
  5. With all due respect, it's not as simple as you make it out to be.

    Understand that there are times ( like back in 1998 ) when the Saudis will open the flood-gates and pump, pump, pump . . . in order to crush the market share of other "marginal" producers . . . and in doing so "teach" them a lesson.

    I think that the Saudis are smart enough to know that GLOBAL demand is so incredibly soft )with all sorts of deflationary forces) that a 2.2 million cut wasn't going to support the market.

    Given the weakness in crude prices over the last 2 months, my guess is that E&P cap-ex budgets are being slashed left and right and the marginal producers ( and projects ) are being forced to shut-down.

    This will set the "stage" for less supply in the future, and a tighter market.
  6. maxpi


    Cartels don't hold together.
  7. Relatively little of the oil we use comes from the middle east.

    That's a 'boogey man,' 'Orwellian' misnomer, intended to scare Americans, and keep the lever of power in the hands of those already there.

    Nearly all of our oil comes from here, Canada, Mexico and Venezuela.
  8. Agree, take Russia, they are desperate for money, they are going to pump away http://www.forbes.com/markets/2008/...-markets-commodities-cx_po_1217markets13.html
  9. yea but we all know oil can easily surge $10 in a day or two on a whiff of good news
  10. Lucrum


    Dito, who knows, if the price goes low enough maybe the Arab terrorists will run out of money.
    #10     Dec 17, 2008