The battle shaping up...

Interesting, to say the least!

In an almost unprecedented move, Asian countries have now joined in what appears to be a global move to bring energy prices downwards to spur economic activity and recovery.

Seems to be a recognition out there from governments that OPEC's long-standing goal of keeping oil prices up is going to be a hard job.

The United States and some European countries rallied together on Thursday to release some of their crude oil reserves to the world markets, not long after OPEC met, to meet a shortfall of global crude stocks and in an effort to bring down the price of oil to bolster economic recovery. OPEC failed to increase production the other day that would have dropped crude oil prices, but the meeting to discuss production increases amongst member countries failed, spurring the move by western countries.

Brent crude shows a drop so far today by close on $1.40 a barrel, while West Texas Intermediate is down slightly by close on sixty cents. Not a big lot, but it's starting to show on refined commodity prices.

I'll be in touch, but it's off to the west coast of the province Monday.

Regards,

George

Another drop in prices coming, but...

From the look of things here in the nest in CBS, it certainly looks like we'll be looking at another round of drops at the pumps when the Petroleum Pricing Office sets prices again at the regular interval.

So far, five days of data are showing diesel to drop by 5.6 a litre, gasoline down by 4.5 and heating/stove oils to drop by an important 4.53 cents a litre.

I'll be cautious on this one. OPEC is meeting in the wings of the latest round of price drops to come and I expect them to make substantial cuts to production. Maret-watchers are looking at OPEC to cut production by a million barrels per day. I'm betting on them cutting 1.5 million as they've already cut some production. Iran has already reduced daily output to 3.7 million from 4.3 a day and Saudi Arabia has also reduced ahead of this so-called "emergency meeting".

While not necessarily true that any cuts would help to stabilize the price of oil somewhat, they are facing the prospect of a larger worldwide economic recession and they want to prevent any kind of a glut that could help crash the pricing of oil to them.

Expect an OPEC announcement as early as Tuesday on future cuts. If that's the case, it might be the last of the price drops we'll see barring any real collapse in the North American or European economy.

Why am I crossing my fingers?...

Regards,

George