Posted by WARREN MOSLER on January 26th, 2009
Thanks, should be more than enough given the small drop in actual demand.
> On Mon, Jan 26, 2009 at 9:59 AM, David wrote:
> Tanker tracking suggests an OPEC11 production of 26.1 mbpd in January,
> compared to the target of 24.85 mbpd, with Saudi Arabia, Venezuela and
> Nigeria leading the cutbacks. However, this represents a cut of only
> 2.9 mbpd from the agreed cut of 4.2 mbpd (a compliance of 69%), which is
> somewhat under the estimated 3.5 mbpd cut needed to balance the market in
> the near term. But it should easily balance the tightening market further out,
> especially if compliance improves.
The contango in the futures market continues to come in, as does the spread between WTI and Brent.
The RBOB contango also coming in, indicating gasoline supplies are also tightening.
This indicates spot supplies are tightening- the OPEC cuts are ‘working’.
Most consumption indicators show crude consumption to be about flat or only down slightly year over year.
The great Mike Masters inventory liquidation that began in July may finally have run its course.
And the Saudis are back to being price setter.
I would strongly recommend any fiscal adjustment that increases aggregate demand be accompanied by policy that immediately and substantially reduces crude oil and gasoline consumption.