Updates
April 20, 2011: Both WTI and Brent oil prices are trending higher. WTI is up $1.30 today, solidly above $109; Brent is up $160, nearing $123. Both are at the high end of their recent price range.
Original Post
Link here.
Saudi Arabia's oil minister said on Sunday [April 17, 2011] the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.So much for the Libyan civil war causing a global shortage of oil.
If that "quote" is accurate, it means that Saudi never did increase oil output despite what they said, and despite the Libyan civil war. Remember, the civil war started in March, and Saudi now says they cut production 800,000 bopd in March.
I don't think I have to say much more; the article speaks volumes. If there is an oversupply, the price of oil should plummet tomorrow (all things being equal).
But something smells in Denmark, and it ain't Brent crude.
If there is an over-supply of oil, one would expect price of oil to start to fall. Generally when OPEC "slashes" output, the price of oil increases. Futures don't seem to correlate well with actual prices the following day, but right now WTI futures are down about 60 cents; earlier this evening WTI oil had been down as much as 80 cents. That is not much of a reaction to an announcement that Saudi Arabia has slashed output.
If "slashing" output doesn't affect price of WTI oil much it suggests traders have known all along that they didn't think Saudi would increase production all that much. In fact, if Saudi says they slashed output in March, this is an "old" story to traders who are in the know.
Oversupply of is the not correct solution do down the oil prices and also it is only a temporary solution not for a long time so we need to develop other resources to bring the oil prices down for a long time and also if we use less oil that means if we used to go to our offices by using bikes not using cars and especially if we use electric bikes and electric cars then we down oil prices for a long time and also we can control pollution will also bring good effect on nature.
ReplyDeletePrice of a commidity is determined by what buyery are willing to pay and what sellers are willing to sell at. As long as buyers pay the asking price, the sellers will set the price.
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