Oil is up 10% today - should we expect a turnaround soon?
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Oddly enough the Saudis were no part of the current situation. The Saudis turned on the same tap as everyday and sold the output on the market as everyday. The excess is a result of North American production. Entering a mature market requires one to be the low cost producer to succeed if the item sold is a commodity. Of the world players North American is one of the highest cost producers. ConocoPhillips is the lowest cost of a sector, the North American sector.
Oil supply (excess) and demand -- nothing more, nothing less. North American production increased from 5 million barrels to 10 million barrels. The excess supply is due to North America production; production profitable at $60 per barrel. Politics is the least of the issues.
If, as you say, the Saudis are achieving "what they set out to do", I guess that's why several members of The Royal Family have made statements, in recent weeks, to the effect that "crude prices in the range of $30 are irrational"? Sorry, but I disagree with your conclusion. While a lot of U.S. fracking HAS been curtailed, I continue to think that was but a "side benefit" of cratering the crude price, and the REAL target, all along, has been Iran and Russia. If you weren't aware, the Saudis have been in a running "battle" with Iran and Russia, for well over a year, concerning competing natural gas pipelines that each intended to construct, both of which, were to transit Syria. Aside from the revenue stream inherent with such an endeavor, if the Iran/Russian p/l (which would have taken Iranian gas to Europe) had been completed, it would have provided Putin even MORE control over Europe than he already has. The U.S. and the Saudis came in, late, with their own proposed p/l (to take Qatari gas to Europe), but Assad snafued that project (Syria is strategic, to BOTH proposed p/l's, and Assad saw an opportunity to exert some influence on the matter), thereby furthering his ties with Iran/Russia. In the context of the p/l "competition", and the failure of the Arab Spring (a Saudi effort to expand Sunni control over the region), Russian military presence in Syria threw another wrench into the works. Couple all of THAT with sanctions on Iran being lifted and signing the nuclear agreement, and suddenly,... Iran was on the rise. And THAT, dear readers, is REALLY what the Saudis are trying to achieve,... parity with Iran/Russia,... although, intentional depression of crude prices is NOT going to overly impress Iran and Russia, at this point. I believe THEY have something a bit more "pointed" in mind in order to encourage the Saudis to "play nice".
The Saudis ARE achieving what they set out to do. The fact that they are imposing taxes in the kingdom is simply a realization that they need to continue with their current policy to be able to survive economically in the long run and they they need to start diversifying they economy somewhat as well as be less generous with public spending.
It's like no one ever reads the world news anymore or believes what they want to believe. Whomever stated that ISIS was born b/c of the Saudi's is an idiot. You know who kept those looneys under control? Sadam Hussein, and who took Sadam Hussein? We did. Get off your white pony and stop blaming everyone else for the crisis and problems of the world and take the responsibility. As one stated below the US was the last one to add more crude into the market, yet it's not the solely responsible one it's a multitude of scenarios and situation that just got aligned; oil price was too high and eventually it was going to fall, it's not the first time and it will repeat again in the future.
Oil will take years to recover, there is too much production and the demand has not changed a bit since a few years back. OPEC will no longer play the game of lowering production to their group so others can increase their production and get the profits, get it through your heads. Oh, and we have Iran getting in the picture as well so don't expect prices to go anything but down or maybe just stay in the 20s. We might see an increase to the 30s and maybe, and I mean mayyyybe the 40s by the end of the year, but don't hold your breath. Good luck to all of us, we will need it old and young.
Walk around the Walmart in Bartlesville and note everyone is a meth addict and everyone is related. Yes Bartlesville is a god forsake shit hole.
2yrz - How very open minded of you,... turd. This is probably how you function at work,... no substance, no reasoning, no real "argument",.... just insult. YOUR career must be epic. As to the inbreeding,... I'll let readers decide which, between the two of us, THAT title best fits.
Obviously the comment below is via one of the inbreeds from Bartlesville.
2csg - It depends upon where crude prices end up. Keep in mind, the Iranians have what may be the lowest cost to produce in the world, but Russia doesn't. And,... Russia's economy is in the crapper. You can bet the Russians will be all about crude prices that yield the highest margins, possible. The primary question, in my mind anyway, is just how far Russia is willing to go, in order to accomplish that. Based upon recent experience, which says there will be NO resistance from our weak, gay POTUS, I'm guessing the Russians are prepared to use force, if necessary, to persuade the Saudis to capitulate and lower their output. In that context, oil prices could soar, perhaps to new heights, and it is in THAT context that I couch my observation that U.S. fracking could be a God send, and provide our nation an energy source somewhat shielded from Russian/Iranian price manipulation. Of course,... anything's still possible, but I can not envision prolonged low crude prices, as it serves no nation's purpose.
No theory required. The Middle East producers are the low cost producers. The North American producers are the high cost producers.
The question of "who should cut THEIR production" is why the Russian military landed in Syria. If you look back over the last 3-4 years, the Saudis have been busy trying to expand Sunni influence over the M.E. The Arab Spring was their first effort. When that failed, ISIS was born. Running oil prices into the ground was intended to bring Iran/Russia to the table, but THAT has backfired on the Saudis, as well. A cursory look at the economies of Saudi Arabia vs Iran indicates that Iran is a country better suited to grow and prosper,... there exists, in their economy, a manufacturing base, technical skills, etc.,... whereas, the Saudi population is 96% a welfare state. MY theory is: The Saudis are in a bit of panic. Their financial reserves, while still robust, are threatened,... they have instituted an "income" tax, raised the price of gasoline, and generally put the squeeze on their own population as one way of stemming the cost of supporting a do-nothing population. That will not go down, well. The Saudis continue to fund a diverse blend of insurgent groups and activities in the M.E., as well. And, NOW,... they've got Iran/Russia breathing down their neck. I'd say their choice is simple. Either play ball with Iran/Russia, or,... get the bat shoved up their ass. How does U.S. fracking fit into that picture? No one knows, yet. But, fracking will, most likely, become a God-send for our nation. It COULD be a bumpy ride.
The "increase" came on the day that trading sites switched from reporting February '16 contracts to March '16 contracts. It wasn't an increase at all, it was an entirely different security.
Why should the Saudi's cut production instead of others? I find it so weird when we
as a country throw a fit when other countries don't do our bidding. How about shale producers cutting production?!
North American doubled production from 5 million barrels to 10 million barrels in the past 10 years. Elsewhere in the world, not so much so...
lol dumbass boomers keeps telling saudi to cut production. Why doesn't North America cut production? You entitled inbred, no wonder you got laid off. Good riddance!
Expect to turn around and bend over as you get kicked out the door.
10% ain't SHT. It needs to go up another 300% to get close to where it was. That will be a while Youngster,but keep wishing in your one hand and SHTin in the other and see which one fills up quicker.
As the price of oil increases so will the production of the non-shale producers. The shale producers will be shut out of the market. Investors will no longer foot the bill for shale production. All eyes are on ConocoPhillips and the 4th quarter analyst presentation (and the dividend).
No. This will be short lived. Turn around to the downside if any thing.
No, Until OPEC cuts production (the Saudis), prices are forecasted to be in the $30s until maybe late 2016. OPEC doesn't meet until June 2016, even though Venezuela is wanting to meet earlier to cut production, but Venezuela's crude is 'poor quality' and takes a hit more than most countries and being a socialist nation (like the Democrats here want), they are in severe financial despair-more so than Saudi Arabia.