OPEC Defers Output Decision to December, Seeks $75 Oil Price

[CalvinHobbes]

http://www.bloomberg.com/apps/...01087&sid=aJWUVURs.PKo

"Nov. 30 (Bloomberg) -- OPEC deferred a decision on whether to cut production again this year by two weeks to gauge the impact of previous cuts, as it seeks to push oil prices back up to $75 a barrel. "

"Ali al-Naimi, the oil minister of Saudi Arabia, OPEC?s largest exporter and its de facto leader, said yesterday that $75 a barrel oil represents a ?fair price? needed to support investment in new oil fields. "

Amazing that they didn't want to do anything when oil was in the $140 range.

 

[dsity]

wow, why don't we invade their countries and steal their oils.

 

[fleshconsumed]

Of course they do, they saw we can bear 75 easily so now they want it.

 

[Fear No Evil]

Originally posted by: dsity
wow, why don't we invade their countries and steal their oils.

Sounds like a plan.

 

[StageLeft]

OPEC rattles its sabre more than it uses it, because in fact its knife is rusty and small. They wanted to defend $100 and then vehementaly defend $80 and we've now seen it under $50. OPEC has very little power at this point that doesn't directly conflict with their immediate and/or long term best interest. Sure they could cut all their production to 0 and put oil to $250 but that hurts them more than their consumers. OPEC is more impotent than many believe and certainly more impotent than they try to project.

I've still not seen a graph anybody has ever produced showing supply changes and their resultant price impacts in the market, but I have come upon a paper a year or two old and the guy who wrote it used various sources and concluded that they can influence prices but not as much as they want and not to the degree that truly holds the world hostage by their will.

Look at OPEC now. Prices have continued to plummet and they have cut production. This means that some of their more economically desperate members are now getting even less percentage of a shrinking pie than they otherwise would. So instead of selling X volume at a crappy price (by their standards), they now sell less than X at a crappy price, which means even less income and economies like Iran, Venezeula, and most of OPEC are in dire need of every oil buck they can get and they need it now.

 

[XZeroII]

I thought that $100 was what was needed. I guess that everything has been getting cheaper.

 

[Throckmorton]

Good. $50 is too low.

 

[3chordcharlie]

Originally posted by: Throckmorton
Good. $50 is too low.

Too low for what?

 

[tfcmasta97]

Im just wondering, with America and Europe now in this huge financial crisis -

what happened and what is happening with those ridiculous record breaking profits the industry has had?

 

[desy]

In the case of the Nationals which is 60% it went into gov't coffers
In the case of oil companies 40% Most reinvested a good chunk into securing drilling rights and equipment with the exception of Exxon who mostly just sat on the cash

 

[0marTheZealot]

Originally posted by: 3chordcharlie

Originally posted by: Throckmorton
Good. $50 is too low.

Too low for what?

Too low of a price makes us complacent and unwilling to explore alternatives.

It's only been 6 months since we hit record highs, so I wouldn't worry too much about it staying this low for very long. When the economies of the world start expanding again, we will run into a massive price spike again. The reason OPEC is cutting production is because the world's major economies are demanding less. It makes no sense producing 100 barrels when only 70 barrels will be bought.

 

[soccerballtux]

Originally posted by: desy
In the case of the Nationals which is 60% it went into gov't coffers
In the case of oil companies 40% Most reinvested a good chunk into securing drilling rights and equipment with the exception of Exxon who mostly just sat on the cash

And we're seeing now they did the smartest thing. You say "sitting on the cash" as if it were bad. All that reinvestment in fields and drilling rights is looking retarded now that oil is <$50/bbl. Exxon was smart, they saw the bubble and knew there was no way it could continue. There are other sectors of the market more worth investing in.

 

[soccerballtux]

Originally posted by: 0marTheZealot

Originally posted by: 3chordcharlie

Originally posted by: Throckmorton
Good. $50 is too low.

Too low for what?

Too low of a price makes us complacent and unwilling to explore alternatives.

It's only been 6 months since we hit record highs, so I wouldn't worry too much about it staying this low for very long. When the economies of the world start expanding again, we will run into a massive price spike again. The reason OPEC is cutting production is because the world's major economies are demanding less. It makes no sense producing 100 barrels when only 70 barrels will be bought.

The other economies won't expand until we do. If we start wasting money on exploring alternatives, then that's less money that we can put into other, more worthwhile ventures that will expand our economy.

The thing with OPEC is there are multiple countries at play here, and they've all got their own budgets to balance. They don't care if only 70/100 barrels get purchased, because they think they can sell all their 15 barrels, and someone else will take the loss by selling less.
Good for us

 

[desy]

didnt say it was a bad thing at all , merely thats just what they did, to the guy asked where did the money go
Having cash right now is good as with the collapse of the credit market, money to pursue new drilling is in short supply

 

[3chordcharlie]

Originally posted by: soccerballtux

Originally posted by: 0marTheZealot

Originally posted by: 3chordcharlie

Originally posted by: Throckmorton
Good. $50 is too low.

Too low for what?

Too low of a price makes us complacent and unwilling to explore alternatives.

It's only been 6 months since we hit record highs, so I wouldn't worry too much about it staying this low for very long. When the economies of the world start expanding again, we will run into a massive price spike again. The reason OPEC is cutting production is because the world's major economies are demanding less. It makes no sense producing 100 barrels when only 70 barrels will be bought.

The other economies won't expand until we do. If we start wasting money on exploring alternatives, then that's less money that we can put into other, more worthwhile ventures that will expand our economy.

The thing with OPEC is there are multiple countries at play here, and they've all got their own budgets to balance. They don't care if only 70/100 barrels get purchased, because they think they can sell all their 15 barrels, and someone else will take the loss by selling less.
Good for us

First of all, I thought market manipulation was bad. I mean, if you let the big players mess with the market, then the price is artificial!

More importantly, there's no 'make 100, use 70' because the price will continue to fall until Supply = Demand through increasing demand and decreasing supply (at lower prices).

I kind of liked the higher prices, although they were murder on my industry, because they reached alevel high enough to start changing our ridiculous behaviour. Quite frankly though, the reduction in total demand was so small, that I rather prefer seeing the profits of the planet-rapists being cut down to size, including both the OPEC nations and the oil companies here in Canada who are running maybe the dirtiest industrial projects anywhere on Earth.