{"id":104786,"date":"2009-12-22T09:46:37","date_gmt":"2009-12-22T14:46:37","guid":{"rendered":"http:\/\/blogs.wsj.com\/environmentalcapital\/2009\/12\/22\/oil-prices-opec-stands-pat-or-does-it\/"},"modified":"2009-12-22T09:46:37","modified_gmt":"2009-12-22T14:46:37","slug":"oil-prices-opec-stands-pat%e2%80%93or-does-it","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/104786","title":{"rendered":"Oil Prices: OPEC Stands Pat\u2013Or Does It?"},"content":{"rendered":"

Here\u0092s the thing about OPEC\u0092s decision to maintain current levels of crude-oil production today: It really amounts to a production cut, but the market doesn\u0092t care.<\/p>\n

The oil cartel for the fourth time this year maintained current production levels, pretty much as everyone expected. With one big caveat: OPEC honchos called for oil-producing states to comply with their output quotas after an alarming lack of discipline since the spring.<\/p>\n

That is, OPEC announced total production cuts of 4.2 million barrels of oil a day late last year. For once, cartel members didn\u0092t cheat too much earlier in the year, and took about 80% of that oil off the market. That helped send crude from the $30s last Christmas back toward the $70 range.<\/p>\n

And those higher prices, in turn, tempted oil producers to keep pumping. Compliance with the cut has fallen to somewhere between 58% (says the IEA) and 61% (says Bloomberg<\/a>). That is par for the course, historically, for OPEC. Which means there\u0092s a lot of oil sloshing around that shouldn\u0092t be.<\/p>\n

OPEC Secretary General Abdalla Salem el-Badri called for oil producers to get back to a 75% level of compliance, the WSJ reports<\/a>. Saudi Arabian Oil Minister Ali Al Naimi went further, introducing the novel idea of 100% compliance with agreed-upon production cuts. <\/p>\n

They aren\u0092t really trifling figures. Getting back to 75% compliance would mean taking about 1 million barrels per day off the world market, right as China and Japan are getting back on the oil wagon. Reaching 100% compliance would mean removing 1.7 million barrels per day from global markets. <\/p>\n

If OPEC announced a production cut of 1 to 2 million barrels per day, oil markets would have a heart-clutching \u0093Oh, Elizabeth\u0094 moment.<\/p>\n

Yet they didn\u0092t. Crude futures in New York were up less than 0.5% in early-morning trading.<\/p>\n

Which suggests that, for all the calls from OPEC heavyweights to improve the cartel\u0092s compliance, nobody gives much credence anymore. <\/p>\n

If demand in industrialized countries is as soft as OPEC suspects, the cartel might someday soon have to really announce a production cut it will partially comply with in order to protect the \u0093perfectly priced\u0094 oil in the $70s.<\/p>\n

<\/img><\/a>
\n<\/img><\/a><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Here\u0092s the thing about OPEC\u0092s decision to maintain current levels of crude-oil production today: It really amounts to a production cut, but the market doesn\u0092t care. The oil cartel for the fourth time this year maintained current production levels, pretty much as everyone expected. With one big caveat: OPEC honchos called for oil-producing states to […]<\/p>\n","protected":false},"author":761,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-104786","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/104786","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/761"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=104786"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/104786\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=104786"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=104786"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=104786"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}