"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Wednesday, March 9, 2011

Oil Futures Are Up On Libya, Disappointing OPEC Statements

One of the delegates to the informal OPEC consultations about oil output, speaking anonymously, has stated that OPEC is not likely to increase production.  "There have been consultations and we don't see a need to meet at the moment."  This is in line with statements made by Mohammad Ali Khatibi, the current OPEC governor, who has said "There is no shortage in the market."  Based on figures in the article, he may by right;  Libya normally pumps around 1.6 million barrels per day, but two-thirds of that production has been shut down (a loss of about1.06 billion barrels per day).  The article notes that Saudi Arabia has increased its own output to 9 million barrels per day, which is almost 1 million barrels per day above its OPEC target.
Nevertheless, the statements are disappointing commodities traders.  The Brent crude oil futures were up $1.31/barrel to $114.37 as of 8:40 AM EST on the statements, as well as on the Libyan attack on rebels in Zawiyah (which holds one of the largest refineries in Libya).
Speaking of Iran, the International Atomic Energy Agency issued a joint statement that "the door remains open" for development of nuclear power, as long as they cooperate  with the IAEA and do not attempt to pursue a nuclear weapons program.

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