Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (827)	10/9/2001 3:45:47 AM
From: craig crawford	Read Replies (1) \| Respond to of 1643

OPEC Unable to Bring Prices Down stratfor.com October 8, 2001 Summary Ministers representing the 11-member Organization of Petroleum Exporting Countries decided Oct. 7 not to cut oil production despite the drop in prices since the Sept. 11 attacks on the United States. This is tacit acknowledgement that restoring oil prices is beyond OPEC's current capability. A production cut of the size necessary to restore the cartel's $25-per-barrel target price would bankrupt all of the OPEC states. Analysis OPEC Secretary-General Ali Rodriguez said Oct. 7 that due to the unique global situation following the U.S.-led strikes on Afghanistan, the cartel would wait before taking steps to limit oil supplies. Prices, according to OPEC's measurement, have fallen 24 percent since the Sept. 11 attacks on the United States while the price of Brent crude continued hovering at around $22 per barrel Oct. 8. For the time being, OPEC's members actually do not have the ability to restore oil prices to their preferred price of $25 per barrel. The global recession, robust oil supplies and the refusal of non-OPEC states to cut production will sabotage any attempt to shore up prices in the next six months. Such a chain of events will lead to cheap energy, higher energy security and a quick degradation in the economies of OPEC members. All the relevant energy-price indicators are pointing in the same direction: down. Energy consumption is lower across the board, in part due to the global recession. For instance, the Oil and Gas Journal estimates that demand for jet fuel is down 20 percent in the United States and down 10 percent elsewhere. The aviation industry accounts for 8 percent of global oil consumption.