OPEC President Says He Would Welcome A Production Cut At Tomorrow's Meeting - FXStreet

[hatrack]

VIENNA (Thomson Financial) - Algerian energy minister and OPEC president Chakib Khelil said Algeria would welcome a cut in oil production at the cartel's output meeting tomorrow, as it expects to see a fall in demand.

In his role as Algeria's oil minister, Khelil told reporters, "I would prefer to cut production because global demand is going to fall."

He said that a decade ago OPEC had not reduced its output swiftly enough to avoid the fall-out from the Asian crisis of the late 1990s, which precipitated a collapse in the oil price.

EDIT

He also admitted that "certain member countries" believed that cutting production at a time oil prices are near record highs would be viewed as a provocation by consumer countries. "I am sure that some members could use this argument in the discussions" of the 13 member states to oppose a cut in production, said Khelil.

EDIT

http://www.fxstreet.com/futures/news/article.aspx?StoryId=fc4e1321-2cc2-4207-884e-2da6f47791ac

[acmavm]

1. Wow! Then the oil companies could use the 'fuel shortage'

excuse. They haven't used that one in a while.

[GliderGuider]

2. I just bet he'd welcome it.

Anything to keep from having to admit that you "cannae break the laws o' physics, Captain!"

[NickB79]

3. And so it begins

Testing the waters for the inevitable cuts they will have to make in the near future.

[mslack]

4. Oil price

Will be interesting to see what they do. There are already predictions oil will reach $120. Just hope this does not send the economy spiraling downward...

[GliderGuider]

5. The question is, $120 by when?

Conservative predictions are saying "by the end of the year", those of us who follow Peak Oil a bit more closely are saying "by June..." I'd expect $150 by year-end to be more realistic.

The economy is already unstable and slowing down due to the credit crisis. That may act to restrain oil prices briefly, but further rises would make economic recovery quite difficult -- and due to Peak Oil, further price rises are inevitable. Consider the prospect of a global depression in two years with oil at $250. How do you generate the economic activity needed for a recovery?

[NickB79]

6. Global depression in 2 years? Damn

I take it then that you've revised down your estimates from last year of how this will all play out?

[GliderGuider]

7. Yes, unfortunately I have.

The rapidity and depth of the current economic collapse took me completely by surprise. I was watching for the right cross of oil/climate/ecology, and completely missed the incoming left hook from debt and derivatives. Things are much more complicated now because the global capital pool is being drained. If we can't get the world's food crisis under control by this fall, look for TS to HTF in Q1 2009. If we do stave off the food problem, then things will probably not get really bad until Q1 2010. How's that for a foolhardy prediction?