Traders Doubt OPEC's Ability To Raise Output, Cut Prices - Marketwatch

[hatrack]

EDIT

What is remarkable about this latest spike in oil prices is not the usual knee-jerk reaction, but the fact that it comes on the heels of the Organization of Petroleum Exporting Countries' pledge to raise output to take some of the heat off prices.

Energy traders aren't buying it. It's not that OPEC is reluctant to raise production. With prices this high, discipline within the group's unruly ranks is not a concern. They were already pumping nearly a million barrels a day above their official quota.

No, the skepticism has more to do with production capacity -- or lack thereof. The guys on the Nymex trading floor are questioning whether OPEC has the ability to lift output by another 500,000 barrels a day, the number they agreed on at their meeting Tuesday in Vienna. Hitting their latest production target assumes no serious disruptions -- natural or man-made -- on the drilling rigs, along the pipelines, or in the tanker lanes carrying the crude to market. That's a tall order, given the political instabilities or environmental challenges surrounding many of the world's richest oil fields.

Add a hurricane or typhoon to the mix and prospects look very dicey indeed.
Such uncertainties also lead inevitably to renewed airing of the Peak Oil theory, which posits that the world's petroleum production is at or near an unsustainable high and doomed to drop as demand gradually overwhelms supply.

EDIT

http://www.marketwatch.com/news/story/oil-hits-80-skeptics-stare/story.aspx?guid=%7B2835B209%2DEA8A%2D4DB0%2DBF9A%2D2D93E31FCAE9%7D

[Harper_is_Bush]

1. Good. I hope the price hits $100/b. Soon.

[Kolesar]

2. Awww, we did that story last month!

:yoiks: