Oil jumps as OPEC acrimony deepens

The Organization of Petroleum Exporting Countries (OPEC) today announced that its members could not reach an agreement to change OPEC's production quotas. How significant is that announcement? In my opinion, not very. Forbes provides these details:

A surge in U.S. oil production has pushed the country’s output to the highest level since 1992, threatening the dominance of the Organization of Petroleum Exporting Countries. The U.S. pumped 7.06 million barrels a day in the week ended Feb. 8, up 1 percent from the previous week and extending last year’s 19 percent gain, the Energy Information Administration said today. OPEC production fell to the lowest level in a year in January, the Paris-based International Energy Agency said today in its monthly report.

OPEC’s likely decision to leave quotas unchanged next week belies the growing prospect of having to make the deepest oil-production cuts since 2009 as a global supply surge threatens to weaken prices. The Organization of Petroleum Exporting Countries may need to lower output by 1 million barrels a day, or 3%, in the first half of next year, according to Societe Generale SA. Brent crude may drop 20% by June if the group doesn’t reduce the amount it pumps, the Centre for Global Energy Studies said.

OPEC will probably keep its output quota unchanged for a second successive meeting next week as members judge prices high enough to cover their spending needs, according to a Bloomberg survey.

Influential members of OPEC, the oil cartel, are joining Saudi Arabia in raising output to cool soaring prices and allay fears of a supply crunch in the west.

David Alton Clark submits:Today’s OPEC meeting was truly historic in nature. For the first time in the life of the OPEC Cartel or “Organization” there is no agreement between OPEC members, as Ali al-Naimi, oil minister for Saudi Arabia, OPEC's biggest producer, stated to Melissa Francis on CNBC’s The Call today.