OPEC May Ratify Output Cuts, Sending Crude Oil Prices Higher

[Renew Deal]

March 31 (Bloomberg) -- OPEC at a meeting today may leave in place production cutbacks planned for next month, six ministers said, a decision that may send oil prices in New York above $40 a barrel to reach levels last seen in the 1990-1991 Gulf War.

OPEC has ``had a stranglehold on this market for a very long time, so to doubt them is not a very smart move,'' said Edward Silliere, vice president of risk management at Energy Merchant LLC in New York. Oil prices may rise to $40 or $42 a barrel later this year as a result of OPEC's plan, he said.

Oil in New York yesterday reached $36.45 a barrel after ministers from Saudi Arabia, Iran, Venezuela, Libya, Qatar and Algeria said the Organization of Petroleum Exporting Countries at its Vienna gathering should trim quotas by 1 million barrels a day, or 4.1 percent, to counter a seasonal drop in demand.

Surging oil prices have led to record U.S. gasoline prices and increased pressure on President George W. Bush to seek ways to relieve consumers of increasing energy costs. Oil companies such as BP Plc are reporting rising profits and returning billions of dollars to investors through increased dividends and stock buybacks.

http://quote.bloomberg.com/apps/news?pid=10000102&sid=apv78X979BaI&refer=uk

There are two things going on here. 1 is Peak Oil. The other is that I think OPEC wants Bush out and this is their play.

[salinen]

1. OPEC wants chimpCo

suicided.

[htuttle]

2. Plus things 3 and 4

3) The falling value of the dollar has bitten into OPEC's buying power. So they raise the dollar price.

4) Demand is increasing far faster than we thought it would in the 1970's. China, especially, has been greatly increasing it's petroleum consumption.

[coloradodem2005]

3. Why would OPEC want Bush gone?

He seems to be friendlier to their causes than anyone.

[Renew Deal]

4. They don't want him marching all through the muslim world.

[htuttle]

5. OPEC isn't entirely run by Middle Eastern countries

Venezuela, for one, has huge pull in OPEC. They were one of the founding members, and were responsible for bringing it back to life not too far back when nobody was honoring their OPEC quotas.

I wouldn't think any of the OPEC members would be happy about the effect the drop in the dollar has had on their dollar-bound investments, either.

[Indiana_Dem]

6. You know I wondered the same thing as well.

This is one way the world can retaliate against this administration. I wonder if it will work if it is true. Too bad it hurts us as well though.