[lbo-talk] OPEC reportedly agrees to production cut

Doug Henwood dhenwood at panix.com
Wed Oct 11 09:25:31 PDT 2006


On Oct 11, 2006, at 12:02 PM, Marvin Gandall wrote:


> the Saudis' dithering over an OPEC
> production cutback

OPEC always has the damndest time engineering production cutbacks. And it's not clear that SA's interest would be in maintaining $70+ prices - high prices are bad for financial markets, where they invest a lot of their revenue; reduce demand by slowing economic grwoth; and encourage the development of alternatives. $50 might be a more agreeable long-term price.


> - particularly the timing of such a move - even though
> the latter is where US influence on the oil market has historically
> been
> most evident. The OPEC cuts are slated to begin at the end of
> October so
> that the impact of any price bounce will be felt after the election,

If the announced cutbacks are credible and large, then the oil market will react almost instantaneously, not with a lag of weeks or months.


> not
> before. It will be interesting to see whether GS follows suit by
> restoring
> the weighting of gasoline futures in its commodity index

By the way, they announced the re-weighting months in advance.



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