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Oil prices started last Monday at $52 a barrel, quickly fell to circa $50, and remained there for the rest of the week. Bad economic news and forecasts of lower demand for oil dominated the energy story, punctuated with occasional bursts of optimism from Wall Street which continues to maintain there are early signs of an economic rebound.
As the world’s economy continues to slip, more investors are seeing oil and other commodities as a safe haven to store wealth. China is making a major effort to convert some of its $2 trillion in reserves into oil and other minerals as a hedge against what might happen to the value of dollar-based securities. This safety-in-oil may prove to be a major factor in supporting oil prices if consumer demand continues to drop.
Recent reports about OPEC efforts to cut production appear to show that the enterprise has stalled after achieving about 3.8 million b/d of the 4.2 million that was mandated. So long as prices remain around $50 a barrel, OPEC seems content to let matters stand. The next OPEC meeting is about 5 weeks away.