As oil states watch their tax revenue evaporate, they’re all desperate to get oil prices back up to levels that sustain spending plans. OPEC is expected to announce an output cut this week, but why does anyone care? Don’t members always cheat, especially during downturns when they’re lucky just to have someone to sell to?
Nonetheless, oil is up, back towards $50 — it recently touched $40. But then, gold is up too, and as far as we know, there’s no planned meeting of the gold cartel anytime soon. Plus, the dollar’s been getting whacked, which means that quoted-in-dollars, oil will necessarily get more expensive.
What’s more, some indicators of economic demand are ticking up. In China, shipping prices are spiking — not back to old levels — bet well off their most depressed levels.
Bottom line: Oil may be up by a few bucks, but this idea of a renewed, envigorated OPEC, ready to cut us off from our beloved oil sounds like a fantasy.