Oil Glut Spurs Production Cuts

If we are running out of oil, why is OPEC cutting production nearly 5%? Or, for that matter, if the world economy is so strong, why are they cutting production? I am extremely leery of oil's ability to hold its current levels. By implication, I am extremely leery of the equity market's ability to do the same. As I've said time and again, corporate profits are the most cyclical in half a century. Part of that cyclicality is due to energy profits.

(Table SP1. OPEC Production million barrels per day)
	07/01/2005 Quota	Oct. 2006 Estimated Production	Nov. 2006 Forecast Production	Nov. 2006 Projected Cut	Nov. 2006 Targeted Cut
Algeria	894	1,430	1,370	-60	-59
Indonesia	1,451	890	890	0	-39
Iran	4,110	3,750	3,700	-50	-176
Kuwait	2,247	2,600	2,500	-100	-100
Libya	1,500	1,700	1,650	-50	-72
Nigeria	2,306	2,300	2,300	0	-100
Qatar	726	850	815	-35	-35
Saudi Arabia	9,099	9,200	8,850	-350	-380
UAE	2,444	2,600	2,500	-100	-101
Venezuela	3,223	2,450	2,450	0	-138
Total OPEC 10	28,000	27,770	27,025	-745	-1,200

Courtesy of the IEA