Randomly Noted

All the talk on both sides of the Atlantic Ocean about the need to curb speculators in oil is part of a larger trend we’ve seen since the onset of the credit crisis and this deep recession: governments want to control more aspects of economies and markets.

The elected leaders of France and the United Kingdom teamed up on an op-ed piece in The Wall Street Journal today to decry oil price volatility. The argument of Gordon Brown and Nicolas Sarkozy is that oil is too important to be left to the short-term profit seekers who inhabit markets.

Continue reading…

The International Energy Agency joins the chorus of those detecting improved  conditions for the world economy, today revising upward its forecast of global oil demand in 2009 for the first time in ten months.  The IEA said it expects US gasoline demand to grow from June 2009 onward, the first growth since September 2007. Oil prices extended their recent strong gains on the IEA report, even though it included a few negative signals for prices. OPEC oil production continues to creep higher, as OPEC members are tempted to take advantage of recent strong price gains. And today’s upward revision in the IEA’s forecast is pretty modest, with the agency saying oil demand this year will remain well below levels in 2008.

As world economies show signs of recovery, and oil prices rise, OPEC has returned to its traditional squabbling over production quotas. After showing remarkable discipline during the recent plunge in oil prices, the pace of output reductions has slowed, according to an analysis by Dow Jones Newswires. OPEC members Angola and Ecuador are disputing their official quotas, and Angola wants to revisit the amount it’s allowed to produce at the next OPEC meeting at the end of May.  Iran says OPEC’s figures on its  production levels are too high because of special factors, such as its need to refine its crude overseas. Whatever the merits of these arguments, as crude prices rise, the temptation to cheat on quotas is growing.  And cheating by some begets cheating by others. A sign that the recent spike in oil prices could be temporary?