OPEC May Reduce Production

The OPEC countries have once more proved that all that matters for the organization is money,money,money since some of the groups oil ministry officials have said they may cut crude production when it meets next month to keep the price above $80 a barrel...
Prices of at least $85 would likely lead to no change in supplies when ministers gather March 5 in Vienna, a third said $80 a barrel would be a signal to pump less, and a fourth delegate said $70 would be unacceptable to most of OPEC's 13 members. UNACCEPTABLE, what about the daily user that pays inflated oil prices...!!! OPEC wants to protect $80 a barrel... $80 a barrel !!!

The combination of falling crude prices and the dollar's 12 percent drop in the past year on a trade-weighted basis puts pressure on OPEC to reduce supplies as slowing economies in the U.S. and Europe threaten energy demand. Oil fell 30 percent and the group reduced production quotas three times in 2001, the year of the last U.S. recession.
Oil rose 97 cents to $88.11 in New York yesterday. Prices rose 53 percent in the past year and reached a record $100.09 a barrel on Jan. 3. They dropped 12 percent since then.

Saudi Arabian Oil Minister Ali al-Naimi, who sets policy for OPEC's largest producer, declined to comment to reporters on prices or production levels at last week's meeting. Al-Naimi said only that the outlook for supply and demand is ``sound.''
The organization, which produces more than 40 percent of the world's oil, scrapped the last official price target of $22 to $28 a barrel in January 2005 after oil exceeded that level for more than a year. Delegates from Libya and Algeria pushed for a price band of about $55 to $60 a barrel in 2006. The proposal was rejected and oil continued to rally.
Concern the U.S. economy, the world's largest, is falling into a recession drove crude lower in the past month. The price dropped $2.79, or 3 percent on Feb. 1 after a U.S. government report showed the economy lost 17,000 jobs in January.
If OPEC insisit in keeping crude prices high then they must suffer the effect of a recession, whether in the U.S. or worldwide.

OPEC held three meetings in 2007, down from six the previous year. The group will likely gather more frequently to monitor the U.S. economy.
Some reports say eighty dollars is probably a new price floor, on a nominal basis it looks high, but if you adjust it for the falling dollar, it is closer to the average of 2006 and 2007 of $58 a barrel....
The dollar's decline eroded the purchasing power of OPEC revenue as members plan to invest $150 billion on new energy projects over the next five years.
OPEC last cut supplies at the end of 2006, reducing quotas twice as oil fell as low as $55 in November. Prices rallied 57 percent the following year.

So if OPEC insisit in keeping crude prices high then demand will drop and a recession, whether in the U.S. or worldwide will be installed...