It is all about the "Benjamins". OPEC wants more money, every month of every year.
The cartel signaled that it will not increase oil production at its current meeting. Their reason is that the global economy is slowing. That means demand will drop. Winter is ending in the Northern hemisphere, so that should drop demand, too. The fact that oil still trades for over $90 does not count for much.
The debate about oil prices works in a circle. Oil prices go up, the economy gets hurt. Demand goes down. Prices drop. The economy gets better, and so does demand for crude.
The problem with the little circle is that it is broken. Demand for oil is not dropping. In China, the government pays for oil at whatever price the market bears but offers businesses and consumers low prices for gas and diesel. It is a hell of a price to pay for keeping their economy strong, but they seem to like it that way.
Oil exporters are keeping more of their own oil. The Saudis and Mexicans have more and more cars. They are building roads, bridges, and ports. They will probably send a smaller piece of their production overseas each year from now on.
OPEC can keep the price of oil high because there is no real evidence that demand is slackening, no matter what their members say. That puts them in the cat bird seat. Until cars run on water or manure, none of it is likely to change.
Douglas A. McIntyre
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