OPEC's Surprise Announcement Gets Big Yawn (OPEC speechless?)

Mish's Global Economic Trend Analysis ^ | 12/18/08

[TigerLikesRooster]

PEC's Surprise Announcement Gets Big Yawn

OPEC is struggling to get prices up. To achieve that result OPEC Agrees Larger-Than-Expected Cut

OPEC, supplier of more than 40 percent of the world’s oil, agreed to cut production quotas by a larger- than-expected 9 percent to revive prices as a global recession reduces demand for crude. “OPEC is sending a message that they are trying to cut pretty seriously,” said Mike Wittner, head of oil research at Societe Generale SA in London. “If they need more cuts, there will be more cuts.”

Market Greets OPEC's Surprise Announcement With Big Yawn

OPEC may be sending a message but the market sent a bigger one as Crude prices tumble despite record OPEC cuts.

Here's how bad things are for OPEC these days: It announced its largest-ever production cut Wednesday and oil prices promptly slumped to $40 a barrel, the lowest level in more than four years.

Ministers of the 13-nation oil cartel were trying to shock moribund markets into life by slashing output 2.2 million barrels a day, more than double two recent production cuts. "I hope we surprised you," said OPEC President Chakib Khelil when asked whether the move would send prices upward.

Instead the markets yawned and there appeared to be more good news for consumers -- at least for the short term. Benchmark crude prices tumbled to $39.88 per barrel Wednesday, levels not seen since July 2004 on the New York Mercantile Exchange. In just five months, crude has given up all the price gains made over the past four years amid an oil glut and the spreading recession.

[jwparkerjr]

Great point! And it needs to be expanded to include government at every level, including those little taxing authorities that so many jurisdictions have instituted to get around controls on the ability to tax. We have ‘em here in Florida. All sorts of things like drainage, fire control, street lights, streets, and so on. The list goes on forever.

If we don’t get control of government at every level it’s going to destroy us. I fear it might be too late.

[M. Espinola]

If the current bearish energy price trending continues we could be looking at a repeat of 1997 ~ 1998 ('Asian Economic Flu era) price levels of under $11 per barrel, then rash, dangerous nuclear weapons threats from OPEC's despotic Iranian régime, and or Russia, signal a sudden return to a panic-driven bullish energy market, even though the rest of the internationally linked economy heads toward Depression #II.