Tags: Forbes | OPEC | oil | price

Steve Forbes: 'OPEC Doesn't Have a Hat, Much Less a Rabbit' to Pull Out of It

By    |   Monday, 01 December 2014 02:28 PM

Steve Forbes, chairman of Forbes Media, is none too impressed with OPEC, which was unable to agree at its meeting last week to take any steps to halt oil's slide.

"OPEC's impact on prices is grossly exaggerated," he writes in an article for Forbes. "Speculators believed OPEC would magically pull a rabbit out of the hat. But OPEC doesn't even have a hat, much less a rabbit."

The cartel barely accounts for more than one-third of global oil output, Forbes explains. Oil production has exploded to at least a 31-year high in the U.S.

After dropping to a five-year low of $63.72 Monday morning, January U.S. crude futures traded at $68.73 on the Nymex Monday afternoon.

"OPEC's growing impotence won't stop its members from meeting or the media from taking OPEC's pronouncements with the utmost seriousness. Wise observers will ignore the charade and instead focus on the dollar price of gold," he argues.

"The biggest factor in the pummeling of petroleum prices — as of now, down 30 percent this year — is the strengthening dollar."

However, "the strong dollar may not last and the Fed will eventually blunder into a new disaster," he writes.

Oil prices have cratered 36 percent since late June, and Murray Edwards, chairman of Canadian Natural Resources, says the commodity might have a lot further to go, though he doesn't expect it to be lasting.

"On a given day you can have prices fluctuate far more than the underlying economic value of the unit," he told reporters in Canada last week, according to the (Canadian) Financial Post.

"Prices could spike down to $30 a barrel, $40. It got down to $35 in 2008, for a very short period of time." If that does happen, "I don't believe it will stay that low for long, because you will see increased demand and supply respond," Edwards said.

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Steve Forbes, chairman of Forbes Media, is none too impressed with OPEC, which was unable to agree at its meeting last week to take any steps to halt oil's slide.
Forbes, OPEC, oil, price
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2014-28-01
Monday, 01 December 2014 02:28 PM
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