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Rumor Of Emergency OPEC Meeting To Hike Crude Supply

Tyler Durden's picture




 

Those following the move in WTI this morning may wonder what the catalyst for the ongoing retracement has been. According to Italian sources (the country most affected by developments in Libya so take it with a grain of salt), OPEC is meeting in Riyadh to evaluate hiking crude supply in light of Libyan developments. This mirrors a less definitive statement issued earlier by the Kuwait oil minister that "OPEC could call an emergency meeting if required by disruption to oil supply due to Middle East unrest." As a reminder after peaking WTI at $98.25, it since pared gains to under $95.75, and was trading at $96.11 last. So while Bernie Bernanke can always print dollars, it is up to OPEC to print oil. And the market seems to be satisfied for now with promises of such.

From Reuters:

OPEC could call an emergency meeting if required by disruption to oil supply due to Middle East unrest, Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah told al-Arabiya television on Tuesday.

"There is no country that produces on its own, we all abide by our own quotas," the minister said of OPEC. "If there was any disruption there will be an emergency meeting and it will be decided to raise the quota for each country according to its ability."

 

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Tue, 02/22/2011 - 09:14 | 984699 Buckaroo Banzai
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That's right, OPEC's gonna save us..

Tue, 02/22/2011 - 09:31 | 984734 66Sexy
66Sexy's picture

yup; it's good OPEC is willing to flood the streets with oil during a never seen before middle eastern crisis.... oil is their only real source of wealth. They should certainly give it way at today's prices instead of (god forbid) exacerbating the crisis by spreading wikileaks rumors that their supplies are not as big as they have been representing...

Tue, 02/22/2011 - 10:49 | 985017 More Critical T...
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As a reminder after peaking WTI at $98.25, it since pared gains to under $95.75, and was trading at $96.11 last. So while Bernie Bernanke can always print dollars, it is up to OPEC to print oil.

Today's price action is a fresh reminder that OPEC tweaking the supply side is what controls global oil prices - not the amount of dollars printed.

Remember, the two are inverse correlated by 0.9 or stronger: when the dollar drops by 1% oil price increases by 1% so the global price remains largely unchanged, all other things being equal.

When it comes to commodities then physical supply and demand is king.


Tue, 02/22/2011 - 11:16 | 985156 The Limerick King
The Limerick King's picture

Your premise is simply untrue

Commodity bubbles aren't new

Inflated by choice

So Elites can rejoice

And to concentrate wealth in a few 

 

Tue, 02/22/2011 - 09:15 | 984700 BobPaulson
BobPaulson's picture

That's a good one. Where are they going to get it?

Tue, 02/22/2011 - 09:45 | 984787 The Limerick King
The Limerick King's picture

The world is now looking quite rough

Can OPEC start pumping more stuff?

If you want a clue

Ask: "What would Ben do?"

(I'm all in on calling their bluff!!!) 

 

 

Tue, 02/22/2011 - 09:14 | 984702 Cash_is_Trash
Cash_is_Trash's picture

If you find a way to print Hopium, you have solved all the world's ills.

- Hussein Obama

Tue, 02/22/2011 - 09:20 | 984704 66Sexy
66Sexy's picture

Having to put more oil out at today's lower price is not good for OPEC; especially with the middle east in turmoil and Saudi Arabian domestic supplies in question. In other words: Talk is cheap.

Tue, 02/22/2011 - 09:28 | 984728 tonyw
tonyw's picture

Whether the price today is up or down a bit is of little consequence for the suppliers, looking at a graph since last August, way back then it was less than $75/barrel, it goes in a nice zig-zag line from bottom left to top right so it's up by a third since then and a dollar or two either way doesn't matter.

The key thing for the economy is the speed of change, back in 73 it went from $3 to $12/barrel, then in 79 it went from $12 to $40.

 

Tue, 02/22/2011 - 09:18 | 984706 Oh regional Indian
Oh regional Indian's picture

And who is manning the straits and canals and pipelines and shipping lanes to ensure that said bump will show at the pump?

Sounds like a bump and pump scheme to me.

ORI

http://aadivaahan.wordpress.com/2011/02/21/through-a-lens-darkly/

Tue, 02/22/2011 - 09:37 | 984757 Gully Foyle
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Oh regional Indian

The real question is who keeps stirring the mideast pot? I saw some comment about how in the end the US/Britain win because we romove the Russia/China buffer.

 

But the US is pretty shaky with their attempt to overthrow Iran. And rumor has it we were caught off guard about the whole thing from Tunisia on.

So I don't think it's us.

Iran and Turkey seem to be the long term winners coiming out with much more regional influence.

But who else? China? Russia? I know Russa has been out manuevering the US with their energy plans.

Or is this part of TPTB great reset plan. Which disrupts everything so we can default on debt obligations, break workers down to minimal pay and crimp various welfare states.

I always assumed the plan for the US was a slow decline making Obama and Dems look weak and allowing for the strong Republican to enter to start the massive crackdown after the 2012 election.

Maybe someone jumped the gun like W stealing Jebbies thunder and spoiling Poppy's plans.

Either way this doesn't end well for the US.

 

Tue, 02/22/2011 - 09:19 | 984708 primefool
primefool's picture

Yeah Kuwait and Saudi crappin in their pants; One phone call from their masssterrs in DC and they'll call a meeting to do whatever Mass-Ter asks.

Tue, 02/22/2011 - 09:47 | 984800 Oh regional Indian
Oh regional Indian's picture

I think the unfortunate word is "Effendi".

yes Effendi...

Must have clogged in their throats, just like Sahib did in India.

ORI

Tue, 02/22/2011 - 09:23 | 984716 Caviar Emptor
Caviar Emptor's picture

This is the equivalent of ECB "hawkish tone". Jawboning. The truth is that production has peaked and proven reserves are dwindling from estimates that were inflated for political goals. And if OPEC's response underwhelms the market then crude will rise a lot. That's the gamble: we all have been lead to believe that OPEC has big muscle power still left in terms of supply and political will, that they can flood the world with crude. Of course a decade of rising crude prices negates that belief. 

We're all around the poker table now. I think OPEC is bluffing: the cards they hold are not that impressive. Their old muscle ain't what it used to be

Tue, 02/22/2011 - 09:24 | 984717 Oh regional Indian
Oh regional Indian's picture

Oh, a little OT, but Mexico does still produce some serious Oil...

 in case people thought Mexico was only about drug wars, here is Take over, step one:

http://www.youtube.com/watch?v=Nk0XTo6faus&feature=player_embedded

 

Errrmmhhhh..... not good.

He's a bullah, no heez a mullah.

Glaringly obvious and the waking dead go about their merry way/day.

ORI

Tue, 02/22/2011 - 09:29 | 984730 Thomas
Thomas's picture

Mexico's output is falling off a precipice. That is equivalent to saying that Texas can ramp it up.

Tue, 02/22/2011 - 09:51 | 984784 Bob
Bob's picture

Mexico has zero capacity to increase production short-term. 

Tue, 02/22/2011 - 09:52 | 984807 Oh regional Indian
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My point exactly. Another supply point, already at breaking point with the drug wars now has Heez a bullah bogeyman to deal with. Heez a bullah will draw US interference (more) in a heart-beat. 

So, seems like all Oil supply points are under severe threat. North sea through inclement weather. Russia? Supply disputes ongoing.

Just overall one giant teetering mess.

ORI

Tue, 02/22/2011 - 10:00 | 984839 Bob
Bob's picture

Crazy times.  Reminds me of the novel Dune, where all possible outcomes converge at a point that is impossible to see beyond.  Anything could happen.  The best course for US might be to pull our military home, consolidate North American economies, shift into natural gas and let the world play this out on its own.  But there's relatively little money for the military-industrial complex in that, so.

Tue, 02/22/2011 - 10:07 | 984859 Flakmeister
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The spice must flow....

Tue, 02/22/2011 - 11:07 | 985108 Oh regional Indian
Oh regional Indian's picture

Prana Bindu.

+6 for Dune reference!

And yes, wind-down looks out of th epicture at this juncture.

ORI

Tue, 02/22/2011 - 11:14 | 985143 Bob
Bob's picture

Too bad.  I'm liking a US default followed by an Amero as the best resolution to what we're looking at now. 

Funny that was such a scary picture not so very long ago.

Tue, 02/22/2011 - 09:44 | 984782 pazmaker
pazmaker's picture

mexico is #2 supplier for USA after Canada, I don't how much more they can put out.

Tue, 02/22/2011 - 09:26 | 984719 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

"German Economic Minister Bruederle says sees no risk to growth forecast from Oil price effects"

- It's the new economics normal. Nothing affects anything else, all is well no matter what, costs, fx movements, unemployment, all is well. Anyone believing these proven liars deserves to be slaughtered like the sheep they are.

Tue, 02/22/2011 - 09:30 | 984729 John McCloy
John McCloy's picture

Ben has taught the rest of the world that rhetoric is all that is needed. Rhetoric and bazookas in the pocket.

Tue, 02/22/2011 - 09:35 | 984750 primefool
primefool's picture

I think it was an earlier "Ben" who said that if you distort language and render words meaningless then all the naked apes can do is resort to violence - because the vibrations made by their larynx no longer has any meaning or effect on the other apes. Bush, Cheney, Rumsfeldt etc etc etc etc etc - should have thought of this little inconvenient fact.

Tue, 02/22/2011 - 09:41 | 984764 Caviar Emptor
Caviar Emptor's picture

True. But rhetoric concerning ramping up the supply of dollars using nuclear-powered printing presses is one matter. Rhetoric concerning ramping up crude supplies is where the rubber hits the road. And if the world witnesses a giant OPEC bluff and fail in the form of underwhelming supply increase then you get a quick and vigorous response in the oil price. 

The world now reveres physical commodities and BennyBux and TrichEcues are on the run. 

Tue, 02/22/2011 - 09:30 | 984732 johnQpublic
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print oil

bury in ground

explore for printed oil

pump oil from ground

 

kinda like pomo

Tue, 02/22/2011 - 09:41 | 984765 Cash_is_Trash
Cash_is_Trash's picture

I think that $150 Brent in 2011 is totally possible.

Anybody know when?

Buy the fuckin' quagmire!

Tue, 02/22/2011 - 09:56 | 984822 johnQpublic
johnQpublic's picture

economy will implode before 150

 

buy the quagmire....indeed

Tue, 02/22/2011 - 09:43 | 984775 Caviar Emptor
Caviar Emptor's picture

Ben may start buying the long dated oil contracts and selling spot :) CrudePOMO

Tue, 02/22/2011 - 09:33 | 984739 NOTW777
NOTW777's picture

oil and other commodity charts look the same - back to 08 hi s

except for gold and silver doing their own thing

Tue, 02/22/2011 - 09:46 | 984790 Stuart
Stuart's picture

If those wikileak reports about the Saudis inflating their reserves are correct, I say good luck to them.  Moment of truth nears.

Tue, 02/22/2011 - 11:09 | 985113 Flakmeister
Flakmeister's picture

  They are, anyone who really follows the Saudi situation was aware of "leaks" back in 2007-08...The Saudis still have a lot of oil, but they cannot ramp up production. It is not the reserves that matter, it is the flow rate.

Tue, 02/22/2011 - 09:46 | 984795 HurricaneSeason
HurricaneSeason's picture

Now's the time to get rid of ethanol. Brazil can do it, we can't. Monkey see, monkey do, ya know. I'm getting a chant together for Washington D.C. after it warms up. I'll post dates and details and I'll bring the bullhorn and the donuts.

Tue, 02/22/2011 - 11:10 | 985121 Flakmeister
Flakmeister's picture

Corn to Ethanol is the US version of the Easter Island logging industry....

Count me in, double dutch chocolate donuts if you please.

Tue, 02/22/2011 - 11:16 | 985148 HurricaneSeason
HurricaneSeason's picture

I'm still working on the chants and signs. So far.......

Harry Harry Krishna High!

Harry Harry Krishna Ho!

Eth and All have got to go!

We'll mix it up, though.

Tue, 02/22/2011 - 10:27 | 984929 HedgeFundLIVE
HedgeFundLIVE's picture

can you believe it took a day of genocide for libya to get downgraded??:

http://www.hedgefundlive.com/blog/libya-downgraded-the-rating-agencies-are-a-joke

Tue, 02/22/2011 - 10:37 | 984967 KickIce
KickIce's picture

The UN is discussing the Libya situation, the solution can't be far off.

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