Hi jim_p: Is this muscle flexing?
slb.com
Oil & Gas News: Top Story
Price Band May Come Back to Haunt OPEC
By Karen Matusic
LONDON, Feb 27 (Reuters) - OPEC's determination to keep crude prices high at a time when the world's biggest economies are threatened by recession may come back to haunt it, analysts and traders warn.
The cartel's pledge to restrict supplies in order to keep crude between $22 and $28 a barrel will almost ensure that demand will fall and its market share will shrink, they said.
"OPEC has got a problem. Perhaps the market cannot support a $22-$28 price. In the long-term, if they try to hold onto the price band, the bigger the (price) crash will be," said Geoff Pyne, an energy consultant for Standard Bank.
....."OPEC shouldn't take such a short-term view and shouldn't react to every price fall. It should even consider a lower price range since demand is slowing because of the economic slowdown while high-cost (non-OPEC) oil is being developed because of the higher price," said Mehdi Varzi of bankers Dresdner Kleinwort Benson.....
U.S. Federal Reserve Chairman Alan Greenspan said lofty energy costs have exacerbated an economic slowdown in the world's biggest fuel consumer. "
Hmmmm...taken together with Mr. Simmon's comment aired earlier ("just in time inventories, etc.") it would seem that there's a little shovin' match going on here. Does it seem to anyone else that these comments contain an interior fallacy? When was the last time OPEC was told what to do by analysts, economists, and bankers?
At first glance the story seems to be about the bankers and economists concern for high energy prices. I believe this to be spin. While they say lower prices are in order, what they are really digging for is volatility. This is where the money is to be made.
An OPEC cut now will guarantee (EDIT: help assure)a steady price, probably on the low side of the band. What these bozos want is blood, all over again, and another chance to mop up.
Just my dos centavos.
Regards,
Aggie |
