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Monday, December 22, 2008

OPEC Doubles Production Drop

Just as the airlines dramatically cut capacity last summer, the Organization of the Petroleum Exporting Countries (OPEC) plans to follow suit doubling the expected drop in production from 2.2-million-barrel-per-day to 4.2 million to prices in an attempt to get back to $75 a barrel. Its previous attempts to reduce the size of world inventories failed and now cover 57 days of supplies, up from the five-year average of 52 days, according to the Washington Post.
Analyst indicate getting to the $75 will be difficult given forecast for a 3.4 percent drop in motor fuel use this year, according to the Energy Information Administration which cited the growing use of ethanol. And just to prove it oil closed at $37 a barrel Thursday, a drop of 10 percent.

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