Friday October 24, 2008

OPEC agrees to production cut of 1.5 million barrels a day from Nov 2008

bloomberg.com :

OPEC has cut oil production targets for the first time in almost 2 years to stem a collapse in prices. The 13 OPEC nations decided to lower supply by 1.5 million barrels a day from Nov 2008, oil ministers said today [24 Oct 2008] at the end of a meeting at the group's Vienna's headquarters. Crude oil has tumbled 57% from a July 11 record of $147.27 a barrel as the financial market crisis spreads, job cuts increase and fuel consumption slows. Prices fell as much as 7.1% to $63.05 on NYMEX after the decision. Another cut in December is "possible," depending on how the oil market reacts, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said.

- The markets are going haywire, as NYMEX crude oil prices continued to fall through the floor even after the production cut. World markets are pricing in for a global economic collapse and for all we know, we might just get one. One of my favourite plays has got over $1.8 billion worth of NI 43-101 certified uranium resources in the ground, and if you look at that alone, never mind the other assets such as equipment and cash in the bank (over $6 million), at the current market cap of less than $6 million, it is going for a price/book ratio of 0.003.

The production cut was interesting, coming in exactly in the middle of the rumored 1 to 2 million barrels per day. What is more interesting is the way NYMEX crude oil prices fell after the decision. Price are going insane and all indications are they will get even more so.

See also :

1. OPEC announces production cut of 520,000 barrels per day
2. NYMEX crude oil falls for the third day to below $72 on recession concern
3. OPEC plans production cut as crude oil threatens to head toward $50
4. Sep 2008 OPEC oil output down 330,000 barrels per day to 32.47 million barrels/day

(2008-10-24 18:28:48 SGT) [Energy] Permalink

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