4.2 million barrels of reduced production and a price of $38

On the very day that oil peaked at $147 a barrel in July of this year, the Washington Post said, “this oil shock is different. There is little prospect that drivers will ever again see gas prices retreat to the levels they enjoyed for much of the last generation…spare production capacity has practically vanished — it’s now about 2 percent beyond the world’s total daily consumption of 85.5 million barrels.” Now oil is less that $38 and 4.2 million barrels of production has been removed from the market. AP

light, sweet crude for February delivery was up 35 cents to $37.94 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, prices fell as low as $36.10…Prices of futures contracts for later this year are higher than the February contract on investor expectations that OPEC’s announced production cuts of 4.2 million barrels a day since September will begin to reduce global supply.

As it turns out, all those stories in the summer about never ending increases in oil prices really did merit a metaphorical Sports Illustrated cover.

3 Responses to “4.2 million barrels of reduced production and a price of $38”

  1. reliapundit Says:

    all those who claim we’re headed for a depression and MUST HAVE IMMEDIATELY a trillion $ federal bailout/”stimulus” package are just as wrong about this as they were 200 $ oil.

  2. sj Says:

    OPEC will continue to cut production until they achieve their desired 80-100. per barrel. The high cost of fuel this past year seriously damaged our economy and society. Oil is finite. We are using oil globally at the rate of 2X faster than new oil is being discovered. We need to take some of these billions in bail out bucks and bail ourselves out of our dependence on foreign oil. Jeff Wilson has a really good new book out called The Manhattan Project of 2009 Energy Independence Now. I wish every member of congress would read this book too.

  3. OriginalFrank Says:

    “OPEC will continue to cut production until they achieve their desired 80-100. per barrel. ”

    Well, this is definitely one theory. Of course, they have tried this many times in the past and it has not worked, so if it does this time, it will show that things have indeed changed.

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