I am long oil. There is naturally a concern that, in order to prevent too great a price rise, OPEC will increase production. Abdallah Al Badri, the Secretary-General of OPEC, has been saying things like, "If we see a real shortage we will have to add."

I do not take this as a threat. Mr Al Badri has also been saying that the recent rise in oil prices is the result of speculation. Thus there is no "real" shortage and no need for OPEC to increase production.

Of course, this could just be a stalling tactic to keep the US off OPEC's back until there is time to build a consensus (some members would enjoy higher prices). On the other hand, OPEC's next formal quota-setting meeting is some months away. All in all, I am not worried about a surprise increase in OPEC quotas turning the price trend around.

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