OPEC may move to keep Oil Bulls calm
The Crude Oil Market Bulls bet against OPEC in Y 2008, they bet right.
3 yrs later, and the Bulls are placing bets against the Oil cartel again, betting it will be unwilling, unable, to stop a long rally in prices towards 100 bbl.
The Big Q: Will they win again?
OPEC has something that they did not recognize in Y 2008: enough spare capacity to boost its output. When Crude Oil prices tapped 147 bbl 3 yrs ago, OPEC members were said to be pumping as much Crude as they could, and when prices spiked, they were unable to react to cool the market.
The ability to raise production at short notice is an important safety valve for OPEC.
Crude Oil producing nations like higher prices because they earn more from exports. But, were prices to rise too high its puts the Global economic recovery at risk, sending demand lower. Consumers could switch to alternatives, too, something OPEC wants to avoid.
That point may be near. The International Energy Agency, the Western countries' Oil watchdog, warned recently that Oil prices were entering a dangerous Zone for the Global economy.
What OPEC decides could also have a big impact on Crude Oil prices. Players in US Oil futures have put record sums of money in contracts from which they will profit should the rally continue, according to data from the Commodity Futures Trading Commission, the US regulator.
Those Bull positions could be un-wound quickly if OPEC open the valves, leading to a sharp decline in prices.
Now, OPEC supplies 40% of all of the Crude Oil the World consumes, and it has 5M BPD + of spare capacity, the bulk of it controlled by doves Saudi Arabia, UAE, and Kuwait.
That is enough to supply the combined Crude Oil needs of the UK, France and Spain.-Paul A. Ebeling, Jnr. www.livetradingnews.com