It is amazing how the march of time dulls the minds of people who are otherwise extremely smart, and OPEC ministers too. Each year over the past three years, 2004, 2005, 2006 and now 2007 we have seen prices top their current range in the third and fourth quarters of the year. This year has proved no exception with NYMEX crude oil hitting $99.11 in trading last week.

In 2004, OPEC still thought that we would return to its $22 - $28 per barrel price range; at least that is what it said it thought. In reality OPEC probably did not have a clue which way the oil price would go, it just said that for political reasons, and today is much the same.


Once again OPEC says crude should return to more normal levels, with its blame placed on the shoulders of “speculators” - as if there was a time when the market place was devoid of people speculating on prices. It also claims - as do executives like Rex Tillerson of ExxonMobil [NYSE:XOM] - that the oil price is inflated due to the weak dollar.

Firstly we find ourselves once again in the third and fourth quarter of the year, with demand still extremely strong and no one really knows where the oil price is going. But secondly we have a series of people, OPEC and Tillerson included, who are placing the cart before the horse.