Lol, there ya go.
When prices soar, and oil barons are racking up record windfall profits, 
they are the first to proclaim that there is nothing they can do about it.
Not their fault - Its all about the free market economy, supply & demand.

But how it changes when prices fall - All that clap trap goes right out 
the window, and its anything but free market.

Price fixing. Collusion. Racketeering. Price gouging. Monopoly.
All of the above - Most others go to jail for it, the oil barons just 
keep getting richer.

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OPEC to Hold Quota After Oil Reaches $75 Saudi Target (Update2)


By Grant Smith and Ayesha Daya

Sept. 7 (Bloomberg) -- OPEC’s success in more than doubling oil prices 
since a five-year low in December will probably persuade ministers to 
maintain production quotas after this week’s meeting.

Reducing shipments beyond record cutbacks last year would endanger the 
global economic recovery, the Organization of Petroleum Exporting 
Countries’ president said last week. Oil rose to $75 a barrel on Aug. 
25, the price Saudi Arabian King Abdullah says is fair for consumers and 
producers.

“OPEC countries will be pleased by the price, which they couldn’t have 
anticipated back in January,” said Edward Morse, the head of economic 
research at LCM Commodities LLC in New York. “They won’t seriously 
consider deepening or extending the cuts at this stage. OPEC has taken a 
lot of oil out of the market, and it’s going to clear the market up.”

Ministers from Kuwait, Iran, Libya, Qatar and Iraq have in the past 
three weeks made similar comments to OPEC President Jose Maria Botelho 
de Vasconcelos, signaling they support existing quotas. The group won’t 
change output at the Vienna meeting, Agence France-Presse reported 
yesterday, citing comments by Iran’s OPEC Governor Mohammad Ali Khatibi.

All the 26 analysts surveyed by Bloomberg News predicted four days ago 
the group will maintain its target at 24.845 million barrels a day at 
the Sept. 9 meeting in the Austrian capital. OPEC supplies about 40 
percent of the world’s oil.

Crude oil for October delivery was trading at $68.08 a barrel on the New 
York Mercantile Exchange at 11:23 a.m. in Singapore, recovering from a 
five-year low of $32.40 in December.

‘Early Stages’

“OPEC is very aware the economic recovery is in the very early stages 
and that they need to be careful about that,” said Mike Wittner, head of 
oil market research at Societe Generale SA in London. “If they cut 
quotas they’d risk pushing the price up too far, too fast.”

OPEC members have shipped more oil onto the market since April to 
capture the rise in prices. Saudi Arabia, OPEC’s largest exporter, and 
other Persian Gulf states are pumping near or below their specified 
allocation.

Countries from Iran to Venezuela are exceeding their production targets 
to maintain government revenue, and the states will be encouraged to 
comply with their agreed limits, an official from a Persian Gulf OPEC 
member said Sept. 2.

The 11 members bound by targets have increased total production, leaving 
their compliance rate with the 4.2 million barrel-a-day reductions 
agreed upon last year at about 70 percent. They supplied 26.055 million 
barrels a day last month, 1.2 million barrels a day more than the limit, 
according to Bloomberg estimates.

Reduce Cheating

“I expect them to make a valiant effort to reduce the level of cheating 
that I believe has grown by more than half a million barrels since 
March,” said Adam Sieminski, chief energy economist at Deutsche Bank AG 
in Washington.

Stockpiles in the world’s most advanced economies equal about 62 days of 
consumption, according to the Paris-based International Energy Agency. 
OPEC ministers have said they want to lower stockpiles to between 52 and 
54 days of demand.

“The producer group will undoubtedly express nervousness at the high 
level of inventory in the system,” Lawrence Eagles, the global head of 
commodities research at JPMorgan Chase & Co. in New York, said in a 
Sept. 3 note. “They are not only correct to be biting their fingernails, 
but may also be forced, in short order, to tighten compliance.”

Oil surged fivefold in five years before peaking at $147.27 in July of 
last year. In the same period, OPEC oil production rose 23 percent to a 
record 32.775 million barrels a day. As the financial crisis spread, 
fuel demand and oil prices collapsed.

December Pact

OPEC responded with three production cuts totaling 4.2 million barrels a 
day. At its Dec. 17 meeting in Oran, Algeria, the group agreed to lower 
output by 2.2 million barrels a day, extending curbs announced in 
September and October.

At subsequent meetings in March and May, ministers decided to hold 
quotas steady as Saudi Arabian Oil Minister Ali al-Naimi said OPEC was 
willing to see oil prices below its desired level to help the global 
economy. King Abdullah said in November that $75 was a price that 
balanced the interests of oil producing and consuming nations.

“We have been seeing slowly a much reduced variation of oil prices,” 
OPEC President Botelho de Vasconcelos, who is also Angola’s oil 
minister, said last week in an interview in Luanda. “This is a sign that 
the world economy is recovering. Everything shows that they will keep 
output unchanged.”

Ministers will gather for this week’s meeting at the group’s 
headquarters at 9:30 p.m. because the summit falls during the Muslim 
holy month of Ramadan.

Companies Lose

Lower quotas hurt foreign oil companies working in OPEC countries, such 
as Paris-based Total SA, which pumps oil in Angola.

“Unfortunately we are losing a good amount in production,” Total Chief 
Executive Officer Christophe de Margerie told reporters last week in 
Paris. “They’re often less-profitable barrels than what we produce in 
other countries so the impact on profit is less.”

While OPEC makes the steepest supply cuts in its history, some producers 
outside the group have bolstered market share to fill in the gap. 
Non-OPEC suppliers, including Russia and Brazil, will collectively raise 
daily output this year by 350,000 barrels to 51 million barrels a day, 
according to the IEA.

The group’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, 
Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and 
Venezuela. The group is scheduled to meet again in late December in Luanda.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aRHP5YOeWlZY