THE END OF OPEC !!!

Crude oil fell to the lowest in more than three years in New York on signs that the economy in the U.S. and Europe is in a more severe economic slowdown than expected. The U.S. first entered a recession in December 2007, the panel of economists that dates American business cycles said yesterday. The country's manufacturing output in November contracted at the fastest pace in 26 years, a report showed. Oil also declined after OPEC deferred a decision to cut supplies until a Dec. 17 meeting. What we're seeing right now is a once-in-a-generation type of economic collapse, there is general agreement that the market has a bottom in the $40s so it's difficult to get really short but at the same time there is no reason for this market to rally. Crude oil for January delivery dropped to $47.36 a barrel in after-hours trading on the New York Mercantile Exchange. That's the lowest since May 20, 2005. It was at $47.66 at 3:23 p.m. in Singapore. The contract fell $5.15, to $49.28 a barrel yesterday, the lowest settlement since May 23, 2005. Oil prices have tumbled 68 percent since reaching a record $147.27 on July 11 as the U.S., Europe and Japan face their first simultaneous recession since World War II.

Crude is also under pressure after the United Arab Emirates' state-owned producer said it would provide full contractual volumes to Asian refiners. All the poor economic news plus the lack of clear indication of full compliance on the part of OPEC, means a further downturn is possible... The present world economic situation is mostly due to the inflated crude prices and SPECULATION that oil producers, oil companies, traders and governments practiced along 2007 and 2008... The fundamental problems of the once-mighty Organization of Petroleum Exporting Countries are being laid bare by falling prices and production cuts. Some members, such as Iran and Venezuela, are desperate to raise oil prices so they can balance their national accounts. OPEC couldn't agree on any production cuts in Cairo but promised to revisit the issue Dec. 17. The burden of production cuts would fall almost totally on the Saudis and other conservative Middle Eastern oil producers. That's why the Saudis didn't buy into that deal in Cairo and why they might balk again. That result could leave OPEC standing but effectively end the cartel's power to change the balance of global supply and demand. In the short run, that would be great for consumers. In the long run, it would lead to global energy chaos…

Professional Crude Trader "WordlWatch"