Will OPEC Cut Again? Heck No!!
Oil has recovered to a $47 to $54 range for the past four weeks from a low of $32.40 in December. It is still down by almost $100 from a record high above $147 last July.
News Saudi Arabia would in May trim oil supplies to some of its Asian customers and one European buyer suggested the world’s top exporter was concerned about high inventories and helped to limit selling.
Saudi Arabia has been largely responsible for OPEC’s high level of compliance—estimated at around 80 percent—with agreements to reduce output by a total of 4.2 million bpd since September last year.
The kingdom and other members of the producer group have lowered their price ambitions, saying oil at around $50 a barrel is a good compromise given the weakness of the global economy.
Well it’s no wonder OPEC will say they can live with fuel cost at $50. They really don’t have a choice do they? If they drop production and prices increase, then who is going to buy the fuel? Don’t get me wrong we need gas and diesel fuel to operate in this country but people will cut back even more.
The mighty OPEC will have to sit on the sidelines and wait for the economy to recover just like the rest of us. It was only a couple of years ago they were thrilled with $30 a barrel, have they had that much inflation, I think not.
To have your fuel cost locked in for the next year is not the worse thing you can do in the world. Fuel cost will probably go up slightly along with gas prices and diesel fuel so better to be safe then sorry.
Sokolis can help you every step of the way in your fuel management program. As fuel experts, we have the knowledge to scope a program just for your company. Visit us at Sokolis Group www.sokolisgroup.com or give us a call 267-482-6155.
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