Quote of the Day.
Strive for progress, not perfection.
This has been mostly a fundamentally driven week for oil prices with the three monthly oil forecasts hitting the media airwaves over the last 24 hours along with the API data late yesterday afternoon, the EIA inventory report this morning and an OPEC meeting going on at the moment. OPEC is meeting in Vienna to elect a new Secretary General and to discuss their production strategy for next year. The market is expecting OPEC to roll over their existing 30 million barrel per day ceiling for now and address a production cut during the first half of 2013 if needed. With the global economy showing signs of stabilizing, OPEC may be more comfortable in taking a wait and see approach to changing production levels until the US fiscal cliff is in the background and more macroeconomic data is released in the first quarter.
Today the U.S. Federal Reserve FOMC meeting will conclude around noon with most market participants expecting the Fed to keep short term interest rates at near zero levels and mostly likely extend the QE3 mortgage buying program. If QE3 is extended it could give a level of support for oil prices as participants view quantitative easing as an inflationary policy and one that could easily result in pushing oil and most all commodity prices higher if in fact inflation starts to increase.
On the U.S. fiscal cliff negotiations there has been some movement over the last day or so as both sides talked yesterday with other discussions going on behind the scenes. Obama reduced his tax increase demand slightly. Both sides still remain pretty far apart but they are moving closer, which is a positive sign that a deal will likely be done. I have been indicating that a deal will get done possibly as early as before the Christmas holiday. Both sides seem to have now come to the realization that they are at the end point as to how much each side can achieve toward their view. As such they are starting to slowly move to the middle.