Is OPEC losing control on world’s crude oil prices?

Since October 16, 2013 West Texas Intermediate (WTI) crude oil decreased in price from $102.49 to $94.11 a barrel, for an 8.2 percent loss, with more to come on the horizon. Good news for consumers with oil companies having enough on hand in cash reserves to make it through yet another pricing adjustment as happened in July 2008. The question on the Oil Producing Export Countries (OPEC) controlling the world’s energy market has been resolved. It has been exactly 40 years since Saudi Arabia and other members of OPEC imposed an embargo on exports of crude oil. Since 1973 US consumers have seen gasoline prices go from $.369 to almost $5 per gallon. Crude oil has rallied back up over to $100 a barrel since the early days of 2009 when West Texas Intermediate crude oil bottomed out at $32 a barrel. Since then the price has been influenced by wars and rumors of wars as well as being threatened by domestic terrorist attacks such as the Boston Marathon bombing earlier this year.

More downside should be expected for crude oil and the dive is just beginning now. Major technical support lies at $60-$62, and oil may not bottom until it falls to as low as $40 The weekly Department of Energy inventory report shows a rise for seven straight weeks. Last week, they rose 5.2 million barrels. Over the past four weeks, inventories have risen by 22 million barrels, the second largest increase since February 2009. Domestic oil production, mainly being fed by hydraulic fracturing, is on the rise and the good news is North America will become energy secure by the end of 2014. OPEC has slowly been losing control on pricing the world’s crude oil requirements. Bob van der Valk lives in Terry, Montana and is currently the Senior Editor of the Bakken Oil Business Journal as well as Fuel-pricing Analyst for US petroleum distributors and retail station owners. He can be contacted at: editor@bakkenoilbiz.com