The Oil Drum

"We both agree, they don't have that kind of control over production & pricing."

Well, I am glad you two agree, but allow me to say I sure as helll don't!  :-)

We have spent the last ten plus years being told that OPEC was the "swing producer", the "pivot point" the focus fo the oil world....and now, all of a sudden, they have no power over pricing/production????

That boggles the mind.  And moreso if you accept that the North Sea and Mexico are essentially peaked.  If OPEC were to back production off, what "swing producer" then would step in and make up the production (and remember, I have more faith in non-OPEC production than the peakers do, and am baffled by this logic!)

It gets even more focused, to my view if you you accept any concept of world peak.  Simmons logic goes that as Ghawar goes so goes Saudi, and as Saudi goes, so goes OPEC, and as OPEC goes, so goes the world....this would make the control of price centered not around OPEC, Saudi Arabia, but instead around Ghawar...I think Saudi Arabia has almost ABSOLUTE control over price if they should risk/be willing/desire to use it.  ABSOLUTE.

So what would lead to this wild perception that they don't?  I can find only one thing....the belief, that came only from the Saudi Arabians own lips, that they did not want oil in the $70 dollar a barrel range, but shucky darn, dag gone it, it went there anyway!

What a ruse.  I do not think for ONE SECOND the Saudi's minded oil going into the $70's, or frankly, it would not have gone into the $70's.  I think anything under $100 would have suited them fine.  The demand side was and is the only control valve until new oil comes on, some non-OPEC, and the rest, of course, OPEC and Saudi, which assures them control of price production as it has been since 1970 with that one bothersome little pest, the North Sea.  That has been the only swing producer large enough, and for a time, reliable enough to mess with their monopoly.  But it looks like those days are gone.
Where to now?

Laying aside for now radical changes in consuption of ALL energy by way of advanced technology  (that is coming, but it will take at least 5 to 10 years to really get into the system, at which point it will be BIG beyone belief), for now, natural gas is the competitor.  GTL, CNG, LNG, and LPG, that alphabet soup that is a thorn to crude oil producers, acts a s counterweight in the short term, nothing else.

So what price?  Well, anything above $50 is well above the historical mean, I could see us touching that long enough to lull ourselves to sleep...but not real long.   Then back to mid to high 60's for next summer, and everything else depends on war, weather, and price speculation.  But the tide is turning very, very fast...we have maybe a half decade to whether this idiotic paradigm, before we demonstrate why the world invented applied science and technology, and artful design.  the hackers and the kids are coming, and to them, limits on efficiency are just games to pushed around, and the barriers to be knocked down.  This is gong to be fun, is there anyway us old guys can get back in there and play?  :-)

Roger Conner  known to you as ThatsItImout

The commercials increased their net poistions for another week at a blistering pace. 5 weeks of commercial buying has always but a bottom in oil. We have 3 confirmed weeks so far. I am betting that Wed- through fri also they did the same as pries fell ( COT covers till tuesday). OPEC wont have to cut production we are gonna rally.