Cut oil production? Not so fast . . .
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Cut oil production? Not so fast . . .
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MARK AUSTIN THOMAS: OPEC meets today in Caracas, Venezuela. On the agenda: oil production quotas. Venezuelan president Hugo Chavez is pushing the cartel to cut production to keep prices where they are. But the rest of OPEC is unlikely to follow that plan, as Alisa Roth reports.
ALISA ROTH: Venezuelan president Hugo Chavez says there’s more than enough oil supply to go around and that $70 a barrel is a reasonable price.
Oil analyst Rick Mueller says Chavez is right in one very limited sense: There is enough oil — for now.
RICK MUELLER: If you look at the fundamentals, the market is well-supplied. There is enough crude out there, and no one is suffering from a shortage right now.
He says the problem is there really isn’t any wiggle room.
MUELLER: What the market is nervous about is there isn’t the safety valve we’re used to having.
Most OPEC members are already pumping at or close to capacity. So investors and producers worry that any disruption in supply could seriously impact the market.
Plus, says oil economist Tom Kloza, a lot of people have big sums of money in things like oil futures and options.
TOM KLOZA: This is more of a market about money flow and less about fundamentals.
Most analysts agree that it’s highly unlikely OPEC will agree to the production cuts Venezuela has suggested.
In New York, I’m Alisa Roth for Marketplace.
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