Crude Oil Nears Record on Signs OPEC Will Keep Output Quota
Here are a couple of weird things:
Sept. 11 (Bloomberg) – Crude oil rose to within 50 cents of a record on speculation rising demand and restricted OPEC production may tighten fourth-quarter supplies.
The Organization of Petroleum Exporting Countries pumps 40 percent of the world’s oil and will set its output target for the rest of the year at a meeting in Vienna today. It will probably maintain its current ceiling because of ample supplies and the prospect of slowing U.S. demand, officials said.
Weird Thing One: OPEC (President Bush: that’s OPEC, to which you do not belong, rather APEC, to which you do. Dickhead) not expanding its current quota does not equal “restricted OPEC production”. Or does it? Is it just me?
Weird Thing Two: why are words like “speculation” wandering about? OPEC have refused to increase quotas, at the specific, periodically desperate, request, periodically demand, of the OECD for a good long while now. I’ve mentioned several times here the quite reasonable (to me) analysis suggesting that OPEC has merely a reservoir of excuses for not increasing production as great as their reservoirs of oil – the extraction of which cannot be increase any more (that was pretty clever, right? The way I did that? Pff. Whatever.)
We are calling the oil market “tight” because, of course, we want it less tight. Opinions differ, and it would appear the people with the oil (as much of it as they have) do not agree.
This could all change quickly. The hopefully-not-an-indication-of-things-to-come explosion of Pemex’s pipelines may yet bring pressure to bear on OPEC just at the last minute. I invite the conspiracy theorists out there to ponder aloud the convenience of the timing.
Actually the effect on the US’s supply, despite the significance of Pemex as a supplier, is meant to be small. The effect is probably more likely to be direct, via American firms based in Mexico. Apropos my previous post, though: I’d avoid stocks exposed to the Mexican economy but, then, I’d probably recommend that, anyway. If nothing else, I reckon NAFTA sure will export a recession quickly, but the attacks seem to be targeted at Mexico:
A shadowy leftist guerrilla group took credit for a string of explosions that ripped apart at least six Mexican oil and gas pipelines Monday, rattling financial markets and causing hundreds of millions of dollars in lost production.
The group, known as the EPR, is a secretive, tiny rebel group that staged several armed attacks on government and police installations in southern Mexico in the 1990s. It was later weakened by internal divisions, leaving it unclear which splinter group may have carried out Monday’s attacks.
The EPR claimed responsibility for a July attack on a major gas pipeline from Mexico City to Guadalajara in western Mexico that forced at least a dozen major companies, including Honda Motor Co., Kellogg Co. and The Hershey Co., to suspend or scale back operations.
Like I said. Conspiracy theorists: open invitation…