Just Be Quiet!
OPEC fears that it is possible we could see supply shortages that could damage the economy! Of course, don't ask them to do anything about it or they may take offense. It appears that the evil cabal that exists to leach off of the global economy by conspiring to withhold the lifeblood of the global economy has feelings. So please have a little sensitivity. You see, as reported by Reuters News, OPEC Secretary General Abdullah al-Badri is predicting a shortage but took offense that the International Energy Agency would dare say anything about it. Mr. Al-Badri is worried if the projection of a shortage of 2 million barrels a day materializes that prices could go up for sure. Yet he says that the International Energy Agency should not interfere in their business and just be quiet. What seemed to really upset Mr. Al-Badri was the International Energy Agency while calling on the cartel to raise production, dared threaten to use their own strategic petroleum reserve oil to make up for any shortfall created by the conspiracy of the cartel. "Strategic reserves should be kept for their purpose and not used as a weapon against OPEC," al-Badri said. Mr. al-Badri also said that the IEA should not be talking to the cartel through the press but should talk to him directly. Boy, I can't want to hear what the IEA has to say about that when they read it in the paper.
Mr. Al-Badri seemed to be oblivious to the impact that the cartel has on price and blamed speculators for the price yet at the same time seemed happy with the current price. He says OPEC is like goldilocks where, "We don't want to see a very high price. We don't want to see a very low price. We would like to see a moderate price," he said. "We think high prices will affect world growth." So then tell me why the cartel could not agree to an increase in production and why the global economy hangs in the balance. Oh, yes, I see, we hurt your feelings. Yet Al Badri told Reuters, "Aside from supply and demand, speculation is a huge factor in the oil market and neither the two world benchmarks Brent nor U.S. crude reflected market realities. I don't think they represent the market, WTI or Brent." He saw a need for a third benchmark but said he could not say what it should be. I might suggest perhaps an index of global crude, but I might risk offending Mr. Al-Badri.
Well OPEC it might be too late for you to save demand and protect your price for oil. QE2 is winding down and the US eventually will get around to raising the debt ceiling which is a must if you listen to Federal Reserve Chairman Ben Bernanke. China is raising reserve requirements on banks that could slow demand. We still have the Greece restructuring or non-restricting overhanging the market and the demand situation in Europe seems to be weakening. And the US supply is running over.
Still the API showed a drawdown in crude oil supply in the weekly stocks report showing a drop of 1.5 million barrels on a decline in imports. Gasoline supply on the other hand increased even as demand increased according to MasterCard SpendingPulse report, of 1.1% from a week ago. Strong farm demand for diesel as well yet the API showed an increase of 1.0 million barrels.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.