OPEC deadlocked on oil production hike (Crude prices moving back up)

CNNMoney ^ | 6/7/2011 | Steve Hargreaves

[Signalman]

NEW YORK (CNNMoney) -- Oil prices breached the $100-a-barrel mark Wednesday after OPEC said it could not reach an agreement about raising crude production.

U.S. crude jumped $1.70, or 1.7%, to $100.81 a barrel. Oil prices were trading down about $1 just before the OPEC announcement. The price of brent crude - the European benchmark - rose 1.2% to $118.20 a barrel.

OPEC's quarterly meeting was widely watched by analysts. The cartel had been under intense pressure to raise production as oil prices approached $120 a barrel last month.

But cartel members were unable to reach a decision to do that, with at least three members reportedly holding steadfast against any production increase. OPEC ministers said they'll take another three months before considering any increase in oil output, according to CNN.

[Peter from Rutland]

Yeah, Drudge has his meter up again. I swear he’s in the commodities market and pumps this crap up whenever he can.

It’s temporary. Again, take oil off the commodities market. It’s a matter of national security.

[Nervous Tick]

>> Again, take oil off the commodities market.

But oil IS a commodity! Why should it not be traded in the commodities marketplace?

[thackney]

Related (not duplicate) thread with some additional sources and info:

Oil Prices Rise After OPEC Says No to New Deal
http://www.freerepublic.com/focus/f-news/2731721/posts

[Nervous Tick]

Followup question: if oil is not to be bought and sold in the commodities marketplace, then in your opinion, how exactly SHOULD it be bought and sold?

[thackney]

It’s a matter of national security.

So as a matter of national security, you want the oil futures traded in other countries and completely out of our control? How does that help us?

The US is not the only commodity market and oil is traded around the clock around the world.

[familyop]

"OPEC ministers said they'll take another three months before considering any increase in oil output..."

So the layoffs, opinions that that there'll be no more QE and other attempts to push oil down were for nothing. Maybe investors weren't convinced that government would willingly shrink itself. And developing trade partners continue to consume more oil.

[Peter from Rutland]

The same way it was before it was put on the market back in the 70s. How did that work out for us?

[Nervous Tick]

>> The same way it was before it was put on the market back in the 70s.

And how was that?

[thackney]

The big boys (seven sisters) made backroom deals and the smaller independent producers paid far more since no one knew any basis of any pricing.

Open markets increase competition. Speculators can sell long or short betting on falling or rising prices. But ultimately, each contract becomes delivered oil to someone.

When traded in a exchange, the exchange guarantee the ultimate delivery giving purchasers security in pricing regardless of the size of their purchases.