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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: T L Comiskey who wrote (51218)	7/17/2004 2:08:05 PM
From: T L Comiskey	Respond to of 89467

Oil supply maxed out? Market falling in face of strong environment. C.Edmunds Real Money: OPEC's decision to cancel its meeting scheduled for next week could be a sign that there is very little for the cartel to discuss. More important, it may be a sign that the group of oil-producing countries is worried about what it might have to say about production. The real story behind the OPEC meeting may be what isn't being said. OPEC has never been a group to avoid meetings, and the cancellation of the upcoming gathering may suggest the cartel's aversion to announcing bad news. With Saudi Arabia turning the spigots to full, it's difficult to see where OPEC would find additional oil. The International Energy Agency suggested this week that recent production increases have tapped out almost all OPEC production. Iraq may be able to provide additional oil when stability reaches the war-torn nation, but that could take years. On the downside, real production risks remain in Nigeria and Venezuela as civil strife could have meaningful negative impact on global production at just about any time. And skeptical pundits even question the ability of Saudi Arabia to sustain such robust production levels, not to mention the risk to production if there is a major security breach in Saudi infrastructure. A.G. Edwards oil analyst Bruce Lanni pointed out just how tight global markets have become. On Thursday, he estimated that daily crude production surplus has shrunk by nearly 80% to just 1 million BPD. That compares to a 10-year average of roughly 5 million BPD. The International Energy Agency suggests that surplus is lower, closer to 600,000 BPD. Either way, OPEC spigots are fully opened and the world is pushing up against the crude production ceiling. Should demand continue to show surprising strength, it may be difficult for supply to keep pace. If that becomes the case, $40 oil may be a thing of the past. It may be a price in the oil bulls' rearview mirror.