OPEC has holiday wishes as well and it appears they are wishing for higher energy prices this winter. But sometimes wishes can’t come true.
That's about all that came out of the emergency OPEC meeting; futile hopes and dreams. Not to mention a little tension growing from those countries that might be overproducing their quota, oh my. Not a very happy holiday season for members of our own little energy cartel. As prices keep falling, tensions keep rising as Gulf State producers were demanding proof that other members of the cartel were actually complying with already agreed upon cuts in production. Sure, countries like Venezuela and Iran love to call for deep production cuts as long as it is not them that have to do the cutting. Saudi Arabia - Yes, Ali Naimi - and Saudi King Abdullah bin Abdul Aziz thinks that a "fair" price for oil is around $75 a barrel and that is what is needed to continue investment in oil. But believing it's fair and being able to do something about it are 2 entirely different matters. You see the truth is that when oil prices are going up, members of the cartel seem to get along. And when prices come down; well not so much. Cartel members are turning on each other and pointing fingers and realize that their credibility is being brought into question. OPEC's failure to cut production and even more importantly show a united front, seems to suggest that they are powerless to do anything to stop the drop in oil prices.
Perhaps the Saudis hope to see a big price break to scare their cheating brethren into compliance. Or it is possible that the Saudis failed to back a cut and blame OPEC over production for the inability of the cartel to stop the price drop in order to save face.
Of course last week’s stock market recovery gave hopes that the $50 area may be a place to start the bottoming process. I think we will see one more extensive selloff below $50 before we see the final bottom.
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We're short January crude oil from the double rollover from apprx 5760 - stop 5650!
Buy January heating oil at 16000 - stop 15650.
Buy January natural gas at 615 - stop 570.
Have a GREAT day!
