Oil Prices - Nov 29

[dan_s]

All eyes will be on OPEC tomorrow.

Most analysts still believe OPEC will sign an accord to cut output, but doubts remain over whether it will be enough to support the market.

Morgan Stanley said Tuesday it still sees a deal as likely but added that the risks of failure have risen.

“A strong announcement from OPEC to cut meaningfully could lift oil to $50 or more over the following days, particularly if supported by strong words from non-OPEC, before focus shifts to execution risk, sustainability and any non-OPEC supply response” analysts at Morgan Stanley wrote.

MY TAKE: If OPEC announces a 3% cut in production (~1,000,000 bbls per day), the price of oil will go up by at least 10%. It doesn't take a math wizard to know that this means they all get more money. My guess (and that is all it is) is that OPEC does announce some kind of agreement. If they don't come to some kind of agreement, they all know that they are going to watch their wealth decline even further. At least a third of the OPEC countries are already standing on the edge of the fiscal cliff.

In other news:
The American Petroleum Institute late Tuesday said crude oil inventories fell 720,000 barrels last week, 120,000 barrels more than expected and which followed a draw of 1.28 million barrels the previous week. Gasoline inventories jumped 3.4 million barrels last week, and distillates rose 2.2 million barrels, the largest build in more than over two months. Cushing recorded a gain of 2.4 million barrels.

[dan_s]

SocGen thinks there is a good chance OPEC announces production cut by early tomorrow: http://www.oilandgas360.com/opec-meetin ... e-to-call/