OPEC Springs Surprise Oil Output Cut

[papau]

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=2&u=/nm/20040210/bs_nm/energy_opec_dc

OPEC Springs Surprise Oil Output Cut
By Peg Mackey and Mona Megalli
ALGIERS (Reuters) - OPEC on Tuesday agreed a surprise cut in output limits from April, sending world oil prices up sharply. The deal slices production limits for the group that controls half the world's oil trade to 23.5 million barrels a day from April 1.
Ministers said the Organization of the Petroleum Exporting Countries would also immediately eliminate 1.5 million barrels a day of leakage being pumped above existing supply quotas.

<snip>


Forecasts, including those of the West's energy watchdog the International Energy Agency, are for second quarter demand to undercut world supply by as much as four million barrels a day, more than double the normal seasonal gap<snip>

Comment: so how much hurt will a drop from from $34 oil to $25 oil do to Bush's friends - and what will Bush do about it?

Can we take 4 million a day out of world supply via some useful terrorist problems? May want to hold back a bit on Libya getting investments to upgrade its production! Can we shut down Venezuela again - is there a pipeline that might have a problem?

[leftchick]

1. I heard on NPR the WH response was...

"please don't do anything to hurt US economic recovery". :eyes:

[papau]

2. sigh - hell of a leader we have in Bush!

:-)

[el_gato]

3. world consumption is around 75-80 millions barrels / day

couple this with all the recent news about less than previously stated reserves

[Frodo]

4. I'm trying to figure out your statements. Please help?

Wouldn't this move (assuming they hold to it, which they never do as evidenced by the current statement) send prices up?

And why is demand going down? I thought the opposite was the problem?

Cutting 4M barrels shouldn't be a problem. Isn't that what we now have coming from Iraq? ("Whoops!, Was THAT the wrong button?)

[papau]

5. Oil Co work off of % margin, so lower price means lower profits.

Why is demand going down - I do not know - This article brought that forecast to my attention - but I really do not know.

Cutting oil supply is not hard - but we want our "friends" (those with contracts with companies close to Bush administration) to continue pumping.

[Frodo]

6. That makes sense..

... but the purpose of cutting supply is to support prices. The article seemed to imply they were coming down.