OPEC Output Cut May Be Coming

By Aug 16, 2008, 5:17 PM Author's Blog  

Opec BuildingThe market’s ongoing enthusiasm over the prospect of lower energy prices, seem to have made OPEC officials rather cranky lately. Apparently, oil below $150 p/bl and its prospects of hitting $100 levels within a relative short period of time – represents for ‘the infinite greed club’ an unacceptable scenario. There is now talk that the producers group may be cutting supply.

OPEC governor Mohammad Ali Khatibi, in a telephone interview told Dow Jones: The market is oversupplied by at least 1 million barrels a day. If OPEC would like to remove this additional oil out of the market, then OPEC has to cut some production.

In other words the insinuation here is: oil, unlike its previous dips, is sliding swiftly and with conviction and OPEC is not going to idly stand by and allow oil prices to drop any further from the current levels. And why should they. Increased oil prices have numerous benefits to all the winning players, except consumers. As the cartel moves the strings of supply – it gets phenomenal yields with crude above $115 – $120 p/bl.

In my view, this is clearly another attempt of manipulating the market!!! But then again, if one considers the recent parabolic rise in oil prices, is not hard to understand – this won’t be the first nor the last time the oil interests have conspired to manipulate the market. Even naivety has its own limits, and I’m sure — the pre-planned avoidance by those responsible for the underlying reasons behind the oil prices (if they start rising after this latest statement from OPEC’s governor) is now in full swing.

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