Quote:
Originally Posted by Giller
One thing about OPEC - they do not have the same power they once had. With the amount of oil being produced by non-opec countries (Notably the US and Canada), it has taken away opecs clout. As well - demand in the past number of years has continued to drop in relation to production. If this continues....prices should remain fairly steady.
The challenge of course is it costs a lot more to produce and get oil in the US and Canada. With low oil prices, it's not as profitable in the US and Canada to get the oil from the ground, so they will slow production, which will raise prices (less supply = higher prices). It's a tough cycle.
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yes but OPEC states like Saudi Arabia have enough in their sovereign wealth funds to move their production up or down, even by as much as 1-2 million barrels a day, and still pay the light bill. So they have some cards up their sleeves too.
Also, and mark my words, when oil prices move up again they will do so in a hurry.
Just like production has branched out to more players so too have the speculators with no shortage of play money. And volatility is the flavor that speculators love most. Neither consumption nor production has fallen by the extremes reflected in the current price action. In other words someone is making a ton of money right now. This might be the only time where Wall Street and Main Street both ended up with some new caysh in their pockets.
US GDP grew by 5% July - Sept....
U.S. GDP Gathers Steam - Businessweek