Energy Prospectus

"OPEC, which failed this week to reach an accord to stabilize oil prices, is a dysfunctional organization that has outlived its usefulness", Oppenheimer senior energy analyst Fadel Gheit said Thursday.

Watch video at: http://www.cnbc.com/2016/06/02/opec-is- ... ar=xfinity

I agree with Fadel that OPEC is no longer an effective organization. However, without a "swing producer" to at least attempt to balance supply & demand, I believe we will see some very big swings in the price of oil. For example, if global supply / demand were in balance, an unexpected supply outage like the Canadian fires would have cause a big spike in the price.

Crude oil is unique in that (a) it is a depleting asset, (b) it is consumed in HUGE quantities each day (97 MM bbls per day by Q4), and (c) it is critical to our standard of living and the global economy. Therefore, a small surplus (like we have had for two years) causes the price of oil to fall and a small deficit (like we will have by year-end) causes the price to spike. I think Raymond James forecast of $75/bbl for WTI in 2017 is likely and necessary to bring stability back to the upstream sector.

More on why OPEC has lost control.

http://www.fool.com/investing/2016/06/0 ... ce=yahoo-2

I don't see how the U.S. can be the new swing producer to replace OPEC because we are net importer. In fact, we are now importing more than 50% of the oil our refineries use each day. Plus, in America the government cannot force companies to increase or decrease production like the national oil companies in OPEC.