The Burning Ring of Oil

WOW!

OPEC announces oil production cuts of 2 million barrels/day on oil and what happens? The NYMEX CL future price drops more than 10%. The chair of OPEC says "SURPRISE" and look what happens it perhaps manages to stave off a 20% drop (for now). According to the USEIA total oil storage dropped by less than 3,000 barrels in the past week, I do not know what analysts were expecting.

In addition, the USEIA reports:

EIA’s Short Term Energy Outlook (STEO) is forecasting increasing 2009 oil production for the United States (December 2008 STEO). Most of this increase will come from three Federal Offshore Gulf of Mexico platforms. The Thunder Horse, Atlantis, and Tahiti platforms will account for two-thirds of the total national increase in 2009.

Source: US Energy Information Adminstration This Week in Petroleum — Large Production Increases in Store for the Gulf of Mexico Now, in terms of the overall petroleum market this is probably not going to be very significant, but the USEIA states By early 2010, the three platforms should reach their combined designed production capacity of 575 thousand barrels per day. which would be 25% of the cut OPEC is hoping to make.

Also, does anyone believe all OPEC nations will honor their quotas?