OPEC today announced it will cut daily oil production by 2.2 million barrels, a response to the shrinking price of gas. And how did the market respond to the news? Crude is down.
OPEC President Chekib Kheli told reporters "I hope we surprised you. If you're not surprised we need to do something about it." Be careful what you wish for President Kheli. The big surprise is the energy markets don't seem to care with crude prices dropping 4.5% to $41.64 a barrel. So no need to trade-in your Excursion yet.
The drop in production is, in the eyes of the market, not large enough to counterbalance the decrease in energy use by a recession-weary populace. Gas prices may continue to rise slightly after January 1st when the change becomes effective, but the economy is still so bad people aren't using as much black gold as before. We're trying to process if this is good or bad news. H/T to Jason for the tip!
Photo: ALI AL-SAADI/AFP/Getty Images