Has OPEC become irrelevant to the commodities market?
It certainly feels that way, lately. On Wednesday OPEC oil ministers agreed to their deepest output cut ever, slashing 2.2 million barrels per day from the oil markets.
The cut, effective January 1, comes atop existing curbs of 2 million bpd agreed by OPEC since September.
But despite the historic move, oil prices tumbled to new four-year lows.
On the news light, sweet crude for January delivery fell more than 5 percent, or $2.21, to $41.39 on the New York Mercantile Exchange. Benchmark crude prices fell as low as $40.20, a price last seen in the summer of 2004.
“OPEC doesn’t have the power to control oil in this environment,” explains Joe Terranova. “The economy is in control.”
Meanwhile U.S. gasoline inventories continued to rise providing further evidence of a major pullback by American motorists. Demand for gasoline over the four weeks ended Dec. 12 was 2.7 percent lower than a year earlier.
