35 comments on This Week in Petroleum 2-27-08
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35 comments on This Week in Petroleum 2-27-08
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I think they'll keep building the reserve until there's no oil available for a build. For my part, I think it's good we have a solid reserve. It will buy us time when/if a real supply crisis occurs.
Just an interesting thing to point out -- OPEC is now positioning against reserves/stocks builds. I think they'd like to sell the oil later and at a higher price. And has anyone noticed that OPEC has had a really tight finger on the tap lately? They seem to be trying to match output with worldwide demand almost exactly. It's a concern. Is it possible spare capacity figures are a bit exaggerated? Or, as some say, is OPEC simply colluding to support higher prices -- all economies be damned?
I think that OPEC is working under a new set of rules. Since we have not had a real crisis yet its hard to determine what the new paradigm is. So we are in a sort of in between state that probably won't resolve till later this summer. My best guess is OPEC wants to see the price level that causes worldwide demand to start dropping. Too many OPEC producers are in decline or maxed out and if anything they know the situation better than we do. Shooting for a price point that leads to slowly dropping demand overtime makes a lot of sense. This implies that they are also betting that None OPEC production is in overall decline or cannot grow significantly.
So given that we could easily not see the true capabilities of OPEC for a few more years.
I don't think they are worried about the world turning away from oil anytime soon they can do the math on that one as well as we can.
Or that those that are able to expand production would be interested in joining OPEC. For example Angola joined recently. After the latest discovery the possibility of Brazil joining was mentioned.