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Claim Crude - OPEC Reference Basket Price

Category: Finance:World Finance News:World News Finance:US Finance News:US News Politics:US Politics JUDGED at 100
Owner:2488, Luscious
Judge:4826, Njörd
due date:2006/01/01

The Claim

This is a scaled claim seeking to discern OPEC's effectiveness in stabilizing oil prices. OPEC has a target range of $22-28 per barrel for its reference basket of crude oil (information below). This claim will pay fx$.5 if OPEC's reference basket is within this target range on the judgement date. If the price of the basket is greater than $28, the claim's value will be determined as .5+((OPEC Price - 28)/20). If the basket price is below $22 the value will be .5+((OPEC PRICE - 22)/20). A basket price of $38 or greater will result in a claim price of 1. A basket price of less than $12 will result in a claim value of 0.

The Organization of the Petroleum Exporting Countries (OPEC) is a group of eleven countries whose economies depend on oil export revenues. Combined, these countries produce about 41% of the world's crude oil. OPEC seeks to achieve stable oil prices in order to stabilize export revenues to its constituent members. To do this, OPEC attempts to regulate its output in order to keep its reference basket price within its predetermined target range of prices. The OPEC Reference Basket is an arithmetic average of seven different crudes from Algeria; Indonesia; Nigeria; Saudi Arabia; the U.A.E.; Venezuala; and Mexico. OPEC's current target range for this basket is $22-28 per barrel. This claim seeks to discern whether OPEC will be successful in maintaining stable prices.

West Texas Intermediate -- the US benchmark, and Brent North Sea Crude -- a global benchmark, are not included in OPEC's Reference Basket, but prices of all crudes are closely correlated with one another. The range of NYMEX Light Sweet Crude Oil April futures in the last five months has been $23.60-39.99. The range of IPE Brent North Sea Crude Oil April futures has been $22.47-33.94. On March 5, 2003, NYMEX April futures settled at $36.39, while IPE Brent April futures settled at $33. On the same day, the OPEC Reference Basket was priced at $32.29.

In the event that OPEC no longer exists by the judgement date, or if OPEC no longer calculates a price for its reference basket, for the purposes of this claim the price of oil will be calculated by averaging the prices of the nearest NYMEX Light Sweet Crude futures & IPE Brent North Sea Crude futures and subtracting 7% from that value. If international markets no longer price oil in dollars and/or OPEC's reference basket price is no longer priced in dollars, then the new currency price will be converted into dollars.If OPEC does not release a price for its crude basket on 2006/01/01, the judge will use the next possible date to determine the claim's settlement value.

OPEC's Reference basket price and other information can be found at www.opec.org

Other helpful sites: New York Mercantile Exchange www.nymex.com

The International Petroleum exchange www.ipe.uk.com


Judge's Statement

If any ambiguities arise in the wording of the claim, I intend to judge it on the basis of its intent. If the scale of the claim requires a payout not divisible by 0.01, I will round to the nearest cent. If at the time of judging OPEC's target range is not what is specified in the claim, I will use the prices specified in the claim text rather than OPEC's target figures, as this would be a better measure of their success at maintaining stability of oil prices.

The latest price is always availible at http://www.opec.org/NewsInfo/DailyBasket/basket.asp

The Market

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Current ask price: 100
Current bid price: 0
Pairs outstanding: 4193
Players participating: 41
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