OPEC Cheating Most Since 2004 as $100 Oil Heralds More Supply

[dipsydoodle]

Source: Bloomberg News

OPEC is breaching its production limits the most in six years, signaling the world’s biggest suppliers are ready to pump more crude next year as oil rallies toward $100 a barrel.

The Organization of Petroleum Exporting Countries excluding Iraq pumped 26.78 million barrels a day this year, exceeding the quotas by an average of 1.934 million a day, the highest level since 2004, according to data compiled by Bloomberg. Crude rose 12 percent in 2010 as demand recovered, trading at about $90 for the first time in two years. Options to buy at $100 next December are near a five-month high.

Flouting quotas lets OPEC, which provides about 40 percent of the world’s oil, boost profits without changing targets set when the first global recession since World War II caused prices to tumble 78 percent. Analysts say the rally may lead the 12- member group to raise output next year after leaving quotas unchanged at this weekend’s meeting in Quito, Ecuador.

“Definitely $100, that would be a trigger,” said Leo Drollas, the London-based director and chief economist at the Centre for Global Energy Studies, a market researcher founded by former Saudi Oil Minister Sheikh Ahmad Zaki Yamani. “Bells are ringing in the corridors already. If this carries on, if it’s a really cold winter, we can see prices heading up to $100. At some stage even the Saudis will realize there’s something going on here, and that they should respond. And they will.”

Read more: http://www.bloomberg.com/news/2010-12-13/opec-cheating-most-since-2004-as-options-signal-oil-hitting-100-next-year.html

[Javaman]

1. And it couldn't possibly have anything to due with China's oil demand

going up 5% year on year.

Remember folks, peak oil IS NOT about running out of oil, it's about not meeting demand.

[Psephos]

2. Good points. n/t