OPEC to Consider Raising Output If Prices Stay High

[RamboLiberal]

http://news.yahoo.com/news?tmpl=story2&cid=808&u=/dowjones/20040304/bs_dowjones/200403040032000016&printer=1

OPEC (news - web sites) will consider raising oil output if prices remain high for the next two weeks, according to cartel officials, as signs mount that the producers' group miscalculated last month in calling for an output cut amid strong demand, Thursday's Wall Street Journal reported.

Officials of the Organization of Petroleum Exporting Countries, which produces about a third of the world's daily output of oil, are expressing surprise that the cost of oil has hit its highest point since last year's U.S.-led invasion of Iraq (news - web sites). The cartel has been particularly caught off guard by the continuing strength of demand for petroleum during a season when use tends to ease, raising questions about the reliability of its production and demand forecasts.

One senior OPEC nation official said his government and others already have quietly abandoned a commitment made by cartel members last month to more closely adhere to quotas and stem cheating. That about-face calls into question a second stage of its February supply-cut plan, a cut in daily output of about one million barrels to take effect April 1.

OPEC's ministers are scheduled to next meet March 31, but they can agree to production changes over the phone. Oil prices for April delivery fell 86 cents yesterday to $35.80 a barrel on the New York Mercantile Exchange, after the Energy Department reported an unexpected rise in commercial inventories of crude oil.

[ze_dscherman]

1. So, they're going to let Venezuela walk the plank?

The fear of oil prices soaring was a good reason for the U.S. not to mess with Venezuela. However, they may risk a coup, if only there is some slack on the oil market ...

[htuttle]

2. Wanna guess what OPEC's target price is?

Calculate what 24 Euros would be in dollars, and there you go. Right now, I think oil is up around 28 Euros per barrel (or was earlier this week), so that's probably what's making them think it's a bit expensive.

The price in dollars is entirely at the mercy of the forex market now, I think, but 24 Euros per barrel has been a pretty consistent price for the last 2 years.