The difference between this morning and this afternoon (in Europe) -

This morning -
http://money.cnn.com/2006/09/11/markets/bc.markets.oil.reut/index.htm?cnn=yes

'The Organization of the Petroleum Exporting Countries (OPEC) decided Monday to keep current production limits unchanged at 28 million barrels per day but left the door open to a supply cut before the end of the year.

"There is no need to cut now but if there is a deterioration in the global economy and prices fall quickly, then we will need a meeting before December," Algerian Energy and Mining Minister Chakib Khelil told Reuters after Monday's talks.

For a year, OPEC has been pumping close to its fastest rate for 25 years to guard against price shocks and ease pressure on consumer economies. But forecasts that demand for OPEC oil will decline in 2007 are beginning to worry some in the group that pumps a third of the world's oil.

Saudi Oil Minister Ali Al-Naimi, OPEC's most influential voice, sought to calm those fears, saying oil demand would remain healthy next year.

"Market fundamentals are very sound," he told reporters. "We are beginning to see a slight decrease in economic growth, very slight.... It is nothing alarming."'

Highlights -
1. Prices way beyond OPEC's target from just a short 18 months ago -
http://www.finanznachrichten.de/nachrichten-2005-01/artikel-1868605.asp

28.01.2005 20:13
OPEC target band is effectively above 22-28 usd/barrel - Kuwaiti minister
VIENNA (AFX) - OPEC's target price band for oil of 22-28 usd a barrel is effectively dead and 32-35 usd would "be a good price," OPEC president Kuwaiti Oil Minister Sheikh Ahmad Fahd al-Sabah said.

"What I can say is 22-28 dollars is not any more a target for OPEC," he told reporters upon arriving for an OPEC ministers meeting in Vienna on Sunday.

2. OPEC is essentially pumping full out, but for a year, that fact had little influence on spot prices.

3. The nice "slight decrease in economic growth, very slight.... It is nothing alarming" comment must be comforting to everyone, right?

4. I wonder if the Texas Railroad Commission minutes from the eartly 1970s are now a part of OPEC's reading list?

After all, pumping full out didn't cause prices to decline, by any realistic measure, suggesting that the world's swing producers just aren't swingers anymore - age catches up to everyone, I guess.

Markets are made by supply and demand, of course, which is reflected in price. But these days, it seems as if flooding the market with oil doesn't work like it used to. Or maybe the market can no longer be flooded?

Manipulated, I grant, but flooded? And remember, it was the Saudi Oil Minister quoted as remarking about what seems to be confirmed demand destruction that 'It is nothing alarming.'

So, lucky that the Saudis are our biggest and best buddy, ready to do what that bunch of bumbling Texas oilmen couldn't do - remain an eternal swing producer, setting the price of oil both up and down.

Around noon -
http://www.bloomberg.com/apps/news?pid=20601103&sid=adhtqG4KvKGU&refer=us

'Members of the Organization of Petroleum Exporting Countries, which pumps 40 percent of the world's oil, decided yesterday to keep production quotas unchanged. The group wants prices to stay above $60 a barrel, Iranian Oil Minister Kazem Vaziri-Hamaneh told reporters today in Vienna, speaking through a translator,

``The price we favor is not below $60'' a barrel, for OPEC's basket oil price, Vaziri-Hamaneh said. ``Supply is more than demand and stocks are at a very high level, and because of these two factors, prices are very fragile.''

Oil pared early gains today as the International Energy Agency cut global oil demand estimates for 2006 and 2007, spurred by a slowdown in the U.S., the world's largest energy consumer.

IEA Forecast

Worldwide oil demand will be 84.7 million barrels a day for 2006, 100,000 barrels a day fewer than estimated last month, the Paris-based IEA wrote today in a monthly report. Oil consumption next year was cut by 160,000 barrels a day to 86.2 million, the e- mailed document said.'

1. $60 as OPEC's floor price? Wow - has anyone told the American public about this?

2. You don't need a swing producer to create or maintain higher prices - you just need an absence of a swing producer.

3. A 100,000 barrel a day estimated demand drop in one month? See the other point 3 above.

Around 3pm -
http://www.foxnews.com/story/0,2933,213430,00.html

'OPEC's output quota will remain at 28 million barrels a day, the 11-nation group said, acknowledging that supplies are "more than adequate" to satisfy world demand. Including Iraq, which is not bound by the quota system, OPEC's daily production is roughly 30 million barrels.'
...
'In its monthly oil market report, the energy watchdog cut 100,000 barrels a day from its earlier growth projections for 2006. It also said OPEC's output fell by 270,000 barrels a day in August. The IEA cut its estimate for demand for OPEC crude in the third quarter of this year by 400,000 barrels a day.'
...
'Analysts said one alternative to formally cutting production targets, which could unsettle markets and send prices soaring again, could be to have members quietly and informally pump less.'

To sum up -
Catch that last line? See, if oil prices don't decline much, it is because OPEC will be informally delivering less, as compared to officially meeting its quotas. Remember the old days, when they used to pump over their quotas? Now, the trick is to pump under their quotas, it seems.

But notice what has world oil production been doing for the last 9 months or so, even as high prices seem to have finally led to that 'slight decrease in economic growth'? Which has led to falling oil prices, if you only look at the past 12-18 months or so. Of course, since 2001, it is up fourfold, but hey, that is the past.  

Take it as you wish, but my conclusion remains peak has arrived, and though objects may appear closer than they are in the rear view mirror, this is about the time where they start fading into the shrinking distance. This should not be confused with peak price (more in OPEC's hands than any time since the mid-70s, I would guess), nor should it be confused with the end of the oil age. What this means, in my eyes, is that anyone planning for a future involving for 100 million barrels a day in the future should just sit down with those optimistic Texans, who are certain that technology will again bring back the glorious days of Texas riding the top of the market.

In the real world, it might be time to start planning with the idea that the world does not have 10 or 20 years to get ready for peak. That clock started ticking sometime when it was still morning in America, with a movie actor replacing the Naval Academy graduate.