This'll teach me to stare at news feeds all morning. At 7:39 AM EDT, the Dow Jones Newswire reported that the Organization for Petroleum Exporting Countries agreed to cut oil production by 1 million barrels per day (about 3 percent). As a result, early electronic trading saw the price of crude oil futures rise back up above $60 per barrel before the New York Mercantile Exchange rang its opening bell. At the time of this writing, it was at a $1.45 increase.
By the time I was about to submit a post this matter turned into a bit of a mess. At 10:30 AM EDT new news came out saying that OPEC president Edmund Daukoru denied the announced reduction. This article (subscription required) in the Wall Street Journal quotes a senior cartel official saying, "All I can tell you is that you should listen to what the OPEC president is saying; he is the one authorized to speak for OPEC."
So was it all just a sham by some "unnamed OPEC governor"? Maybe not. Daukoru says, "We each have an idea of what is an appropriate response... We agree that something needs to be done. We will have to agree on how much, how soon and how we distribute it among the member countries."
The WSJ article also points out that last Thursday there was an unsourced report in the Financial Times saying that OPEC has formally agreed to cut output by 4 percent in the coming weeks to defend the $50 to $55 price per barrel range. When two unofficial leaks converge in this fashion, a certain substance forms that's difficult to discount.
Reuters also reported on the alleged oil production cut. In their original article, they speculated that further cuts may be incurred at OPEC's next meeting on December 14th.
I'm sure we'll be hearing more about this quite soon.
Note: The rise in crude oil futures have since dropped to +89 cents on the day, still trading above $60 per barrel.
Late update: Crude oil futures for November delivery settled up 62 cents at $60.03 per barrel. Intraday trading saw the price rise as high as $60.97.
[Source: Wall Street Journal, subscription required]
By the time I was about to submit a post this matter turned into a bit of a mess. At 10:30 AM EDT new news came out saying that OPEC president Edmund Daukoru denied the announced reduction. This article (subscription required) in the Wall Street Journal quotes a senior cartel official saying, "All I can tell you is that you should listen to what the OPEC president is saying; he is the one authorized to speak for OPEC."
So was it all just a sham by some "unnamed OPEC governor"? Maybe not. Daukoru says, "We each have an idea of what is an appropriate response... We agree that something needs to be done. We will have to agree on how much, how soon and how we distribute it among the member countries."
The WSJ article also points out that last Thursday there was an unsourced report in the Financial Times saying that OPEC has formally agreed to cut output by 4 percent in the coming weeks to defend the $50 to $55 price per barrel range. When two unofficial leaks converge in this fashion, a certain substance forms that's difficult to discount.
Reuters also reported on the alleged oil production cut. In their original article, they speculated that further cuts may be incurred at OPEC's next meeting on December 14th.
I'm sure we'll be hearing more about this quite soon.
Note: The rise in crude oil futures have since dropped to +89 cents on the day, still trading above $60 per barrel.
Late update: Crude oil futures for November delivery settled up 62 cents at $60.03 per barrel. Intraday trading saw the price rise as high as $60.97.
[Source: Wall Street Journal, subscription required]
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