It's a bit of a mystery why crude futures closed at a record level Tuesday, even after some of the world's biggest oil producers agreed to a hefty increase in oil output levels.Bottom line: It's a bit of a mystery
At a meeting in Vienna on Tuesday, the Organization of the Petroleum Exporting Countries agreed to raise its production level by 500,000 barrels per day, effective Nov. 1.
OPEC's official output quota for 10 of its 12 members was at 25.8 million barrels per day, but the U.S. Energy Department said OPEC's actual output in July, excluding Angola and Iraq, was at 26.7 million barrels per day.
Then news reports emerged with the new official OPEC quota of 27.2 million barrels -- which implies that the cartel is recognizing that it's been producing above its target.
OPEC "'formalized' ... their current overproduction, which was roughly 900,000 barrels per day. Then on top of that, they added 500,000 barrels per day in new production," said Kevin Saville, a managing editor at Platts, who is on site at the meeting in Vienna.
Friday, September 14, 2007
No one understands oil
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6 comments:
Sure is hard to call a top, isnt it?
Yes, Anonymous, it is very hard. Would be easy, everybody and his dog would be wealthy. I still believe someone out there is going to make a lot of money shorting oil.
My guess is that it is probably a good short. Sometimes I hate the saying timing is everything.
Look back just 10 years. I remember when S&P downgraded the credit profiles on all the big oils around the time Exxon and Mobil merged around '98. Oil was around 10$ a barrel.
The price of ethanol fell 30% this year, meaning that OPEC is right saying that the world is well supplied in oil. A slight oversupply and the price will collapse. I thought this will happen after the summer driving season, as in 2005 and 2006, but it didnt. The public's mood is of panic (see the run on British banks) - the end (of oil, if not the world) is near. Nonsense. I am shorting oil.
The refiners are some of the scariest but likely best shorts, eh? ALJ, VLO, HOC, TSO oh my. Oil service seems parabolic.. NOV, SII, OIH etc man oh man... Grant me the grapes to get short here.. Great interview with Micheal Rothman in the most recent Barron's.
elliot, Can anybody imagine that the price of oil will continue rising indefinitely? I am expecting the top to come soon. The trigger maybe strong winds in the Caribbean, a Nigerian kidnapping, a "pronunciamiento" by Hugo Chavez, or something like that. When the top is reached, it will be the right time to short oil. I started too early, but I am confident that around mid-November the price will be under 65.
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