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OPEC, which Tuesday again lowered its 2009 global oil demand forecast (pdf), is still seen cutting production quotas, but at its regularly scheduled meeting on December 17 in Algeria, not at its special meeting November 29 in Cairo.

Still, the compelling question remains whether OPEC members will comply with existing decisions to lower production, let alone new ones, said economist Peter Dawson.

OPEC problem: production 'cheaters'

"OPEC members are getting into a bit of quandary, and it's one we've seen before, cyclically, in the oil market. States know that if they all cut, their action will support prices some," Dawson said. "The problem has been that historically, some members 'cheat' a little and produce over their quota, thinking their small increase will not affect prices that much, and they will reap extra revenue as a result. When several members do this, the price of oil continues to drop, and so does the cartel's effectiveness."

In the past, cheaters have been small OPEC states, such as Iran, Libya and Nigeria, Dawson said. Oil Tuesday fell 37 cents to $54.58 per barrel. Oil has plunged more than 60% since hitting a record high of $147.27 per barrel this summer, as both long-term investors and short-term traders exited long positions in the markets.

Continue reading OPEC still seen cutting supply in December, but will members comply?

OPEC still seen cutting supply in December, but will members comply? originally appeared on BloggingStocks on Tue, 18 Nov 2008 10:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>gasoline pricesGasolinePricesIEAInternational Energy AgencyInternationalEnergyAgencyinthenewsoil pricesOilPricesOPECTue, 18 Nov 2008 10:40:00 EST<![CDATA[The International Energy Agency warns of lack of investment in oil production]]>http://www.bloggingstocks.com/2008/11/12/the-international-energy-agency-warns-of-lack-of-investment-in-o/http://www.bloggingstocks.com/2008/11/12/the-international-energy-agency-warns-of-lack-of-investment-in-o/http://www.bloggingstocks.com/2008/11/12/the-international-energy-agency-warns-of-lack-of-investment-in-o/#commentsFiled under: , , , , ,

In a new report today, the International Energy Agency warned that an insufficient amount of investment into oil supply is going to result in a serious supply shortage that could make the recent record high oil prices look weak in comparison.

Oil prices spiked to a record high $147 a barrel earlier this summer, but have since been in a pretty steady downward spiral, and were down again today, as the credit crunch and recession fears have created fear among oil investors that oil demand is going to erode over the months to come.

Prices were off sharply again today, and in afternoon trading oil was down another $3.17 a barrel to $56.16, off 5.3% on the day, as the U.S. government lowered its forecast for oil next year to $63.50, down from its previous estimate of $112 that it maintained back in October.

Continue reading The International Energy Agency warns of lack of investment in oil production

The International Energy Agency warns of lack of investment in oil production originally appeared on BloggingStocks on Wed, 12 Nov 2008 17:05:00 EST. Please see our terms for use of feeds.

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