There are two competing forces at work in the oil market. On the one hand, OPEC has already cut production by 4.2 million barrels per day since last September. OPEC's secretary has said the producer group was willing to make further cuts when it meets in March. The price of crude has been holding steady near (above or below) the $40.00 per barrel mark.
Another factor weighing on the market is the threat of some 30,000 U.S. refinery workers who may go on strike. This can bring our refinery capacity to a virtual standstill. In Britain, workers staged an unofficial walkout on Friday in protest over the use of foreign workers.
On the demand side, prices remain under pressure. The U.S. Energy Information Administration said the November's demand was 305,000 barrels per day, less than previously estimated, and down 1,577 million barrels per day from a year earlier. This is a huge number and it reflects the weakness in the U.S. Economy.
In addition, Japan, the world's third largest economy, saw a whopping 10% drop in industrial production last month.
What is your guess? Will prices go up from these levels or decline?
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Reader Comments (Page 1 of 1)
2-02-2009 @ 12:55PM
Bob Olear said...
Its not hard finding oil. You keep digging wells until you hit on two. Then on paper draw a straight line bertween the two. Thats where the pool of oil is. No more digging. Oil companies getting to much compensation.
2-02-2009 @ 1:21PM
Iridium said...
The real price of oil should be going down.
The speculative greed based bogus price of oil will probably go up because the speculative criminals hold all the cards.
Until the speculative criminals are arrested and hung for treason the price of oil will continue to be set at an unrealistic level.
Can you imagine what the price of oil would be if the current situation was going on without the bogus price runnup of the past 3 years. You wouldn't be able to give oil away. The price would be $5 a barrel.
3-05-2009 @ 12:11PM
Patrick Kane said...
I can see that Iridium and Bob Olear are a couple of the biggest idiots I have had the misfortune to read about.They have no consept about how oil is found much less anything about the industry.I log interpretation for my Oil and gas customers and so far these two idiots have caused instant laughter when I have read there comments to anyone.If you don't know what your talking about shutup.Patrick Kane