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Oil Prices Collapse After OPEC Keeps Oil Production Unchanged - Live Conference Feed
But, but, but... all the clever talking heads said they wil have to cut...
- *OPEC KEEPS OIL PRODUCTION TARGET UNCHANGED AT 30M B/D: DELEGATE
WTI ($70 handle) and Brent Crude (under $75 for first time sicne Sept 2010) are collapsing... as will US Shale oil company stocks and bonds (and thus all of high yield credit) tomorrow. The Saudis are "very happy" with the decision, Venzuela 'stormed out, red faced, furious.' Commentary from various OPEC members appears focused on the need for non-OPEC (cough US Shale cough) nations to "share the burden" and cut production (just as the Saudis warned yesterday).
Live Feed (via OPEC) - click image for feed
* * *
It appears OPEC members have varying opinions...
- *KUWAIT'S OIL MINISTER SAYS HAPPY WITH OPEC OUTPUT DECISION
- *OPEC DECISION IS `VERY HAPPY' ONE: [SAUDI ARABIA] NAIMI
- *IRANIAN OIL MINISTER SAYS HE'S `NOT ANGRY' WITH OPEC DECISION
- #OPEC Venezuela Ramirez storms out red faced. Looked furious.
- *OPEC, NON-OPEC MUST SHARE OIL MKT BURDEN: NIGERIA MINISTER
- *OPEC `NOT PLAYING HARDBALL' IN OIL MARKET: NIGERIA MINISTER
- *OPEC DECISION WAS BEST THING TO DO AT THIS TIME: NIGERIA
- *OPEC MADE A GOOD DECISION: ECUADOR OIL MINISTER
- *WE ARE MAINTAINING OPEC UNITY: ECUADOR MINISTER
Maybe this is why...
* * *
This means that the oil price war that we discussed here is very much in place...
History may not repeat but it rhymes so loud sometimes that Einstein would be rolling in his repetitively insane grave. As Bloomberg notes, the last time that U.S. oil drillers got caught up in a price war orchestrated by Saudi Arabia, it ended badly for the Americans. "1986 was the big price collapse and the industry did not see it coming,” said Michael Lynch, president of Strategic Energy and Economic Research who has covered the oil sector for 37 years, "it put a lot of them out of business. You just don’t forget it. It’s part of the cultural memory." Think it can't happen again? Think again... consider how levered US Shale drillers are and just what Saudi has to gain from keeping their foot on the US neck... In 1986, the U.S. industry collapsed, triggering almost a quarter-century of production declines, and the Saudis regained their leading role in the world’s oil market.
* * *
This is not good news for the US credit market...
According to a Deutsche Bank analysis looking at what the "tipping point" for highly levered companies is in "oil price terms", things start to get really ugly should crude drop another $15 or so per barrell. Its conclusion: "we would expect to see 1/3rd of US energy Bs/CCCs to restructure, which would imply a 15% default rate for overall US HY energy, and a 2.5% contribution to the broad US HY default rate.... A shock of that magnitude could be sufficient to trigger a broader HY market default cycle, if materialized. "
Here are the details:
So how big of an impact on fundamentals should we expect from the move in oil price so far and where is the true tipping point for the sector? Let’s start with some basic datapoint describing the energy sector – it is the largest single industry component of the USD DM HY index, however, given this market’s relatively good sector diversification, it only represents 16% of its market value (figure 2). Energy is noticeably tilted towards higher quality, with BB/B/CCC proportions at 53/35/12, compared to overall market at 47/37/17. We find further confirmation to this higher-quality tilt by looking at Figure 3 below, which shows its leverage being around 3.4x compared to 4.0x for overall market. Similarly, their interest coverage stands at noticeably higher levels, even having declined substantially in recent years (Figure 4).
Energy issuer leverage has increased faster than that of the rest of the market in recent years, but this trend has largely exhausted itself in recent quarters. As Figure 5 demonstrates, growth rates in total debt outstanding among US HY energy names have been only slightly higher relative to the rest of HY market. It is almost certain in our mind that with the current shakeout in this space further incremental leverage will be a lot harder to come by going forward.
Perhaps the most unsustainable trend that existed in energy going into this episode shown in Figure 6, which plots the sector’s overall capex expenditure, as a pct of EBITDAs. The graph averaged 150% level over the past four years, clearly the kind of development that could not sustain itself over a longer-term horizon. Our 45%-full sample of issuers reporting Q3 numbers has shown this figure coming down to 110%, a move in the right direction, and yet a level that suggests further capacity for decline. This chart also shows, perhaps better than any other we have seen, the extent to which current economic recovery in the US has in fact been driven by the energy development story alone.
The next question we would like to address here is to what extent the move in oil so far could translate into actual credit losses across the energy sector. To help us approach this question we are borrowing from the material we are going to discuss in-depth in next week’s report on our views on timing/extent of the upcoming default cycle. For the purposes of the current exercise we will limit ourselves to saying that we have identified total debt/enterprise value (D/EV) as an important factor helping us narrow down the list of potential defaulters. Specifically, our historical analysis shows that names that go into restructuring, on average, have their D/EV ratio at 65% two years prior to default, and, expectedly, this ratio rises all the way to 100% at the time of restructuring. From experiences in 2008-09 credit cycle we have also determined that there was a 1:3 relationship between the number of defaulting issuers and the number of issuers trading at 65%+ D/EV prior to the cycle. Again, we are going to present detailed evidence behind these assumptions in the next week’s report.
For the time being, we will limit ourselves to applying these metrics to current valuations in the US HY energy sector, and specifically, its single-B/CCC segment. At the moment, average D/EV metric here is 55%, up from 43% in late June, before the 26% move lower in oil. About 28 pct of energy B/CCC names are trading at 65%+ D/EV, implying an 8.5% default rate among them, assuming historical 1/3rd default probability holds. This would translate into a 4.3% default rate for the overall US HY energy sector (including BBs), and 0.7% across the US HY bond market.
Looking at the bond side of valuation picture, we find that energy Bs/CCCs are trading at a 270bp premium over non-Energy Bs/CCCs today (Figure 7). This premium implies incremental default rate of 4.5% (= spread * (1 – recovery) = 270 * (1-0.4) = 4.5%). Actual default rate among US HY Bs/CCCs is currently running at 3%, a level that we expect to increase to 5% next year (not to be confused with overall US HY default rate, currently running at 1.7% and expected to increase to 3.0% next year).
The bottom line is hardly as pretty as all those preaching that the lower the oil the better for the economy:
In the next step we are attempting to perform a stress-test on oil, defined this way: what would it take for overall US energy Bs/CCCs segment to start trading at 65%+ total debt/enterprise value? Our logic in modeling this scenario goes along the following lines: if a 25% drop in WTI since June 30th was sufficient to push their average D/EV from 43 to 55, then it would take a further 0.8x similar move in oil to get the whole sector to average 65 = (65-55)/(55-43) = 0.8x, which translates into another 20% decline in WTI from its recent low of $77 to roughly $60/bbl. If this scenario were to materialize, based on historical default incidence, we would expect to see 1/3rd of US energy Bs/CCCs to restructure, which would imply a 15% default rate for overall US HY energy, and a 2.5% contribution to the broad US HY default rate.
How should one trade an ongoing collapse in oil prices? Simple: sell B/CCC-rated energy bonds and wait to pick up 10%.
If this scenario were to materialize, the US energy Bs/CCCs would have to trade at spreads north of 1,800bp, or about a 1,000bps away from its current levels. Such a spread widening translates into a 40pt drop in average dollar price from its current level of 92pts for energy Bs/CCCs.
It gets worse, because energy CapEx is about to tumble, which means far less exploration (and US fixed investment thus GDP), far less supply, and ultimately a higher oil price.
As the market adjusts to realities of sharply lower oil prices, it is important for to remember that the US HY energy sector is a higher quality part of the market. Higher credit quality will help many of them absorb an oil price shock without jeopardizing production plans or ability to service debt. Their capex rates, expressed as a pct of EBITDAs, have already declined from an average of 150% over the past four years to roughly 110% today. We still consider this level to be high and thus subject to further pressures. This in turn should work towards slower rates of supply growth, and thus ultimately towards supporting a new floor for oil prices. A 25% in oil price so far has pushed debt/enterprise valuations among US energy B/CCC names to a point suggesting 8.5% future default probability, while their bonds are pricing in a 9.5% default probability.
And the scariest conclusion of all:
Finally, our stress-test shows that a further 20% drop in WTI to $60/bbl is likely to push the whole sector into distress, a scenario where average B/CCC energy name will start trading at 65% D/EV, implying a 30% default rate for the whole segment. A shock of that magnitude could be sufficient to trigger a broader HY market default cycle, if materialized.
* * *
And US energy stocks...
As Barclays notes,
As oil prices continue to fall, we review the likely supply response of tight oil supplies. Admittedly, cost of supply curves do not tell the whole story about where prices might bottom. At $80/b WTI, we think most producers will sweat it out and achieve their stated production objectives in 2015. But if prices remain at these levelsthrough 2015, it could compromise the significant potential new volumes that are needed to offset declines from existing wells. This new, higher-breakeven volume is small in 2015, but becomes much larger in 2016.
As we stated in the most recent Blue Drum, we expect a rebound in prices in 2H15. But, if prices do remain lower and fall to $70 for all of 2015, half of proven and probable (2P) remaining US tight oil reserves would be challenged. The near-term (6-month) effect would be marginal, but fewer new volumes would be added in 2H15 and in 2016. On a net basis, that implies a reduction to growth of about 100 kb/d for 2015 as a whole. A growth impact of 100 kb/d is a drop in the bucket in the context of total non-OPEC growth of around 1.5 mb/d. Thus, we expect downward price pressure to mount unless OPEC supplies less or demand rebounds.
At $70/bbl, 80% of the 2.8 mb/d of new tight oil volumes by 2017 (not including declines) would be produced (meaning 800 kb/d from new drilling, a reduction of 200 kb/d over the next three years), according to WoodMackenzie.
There are three reasons to be cautious with how cost curves are used.
First, WoodMac’s ‘half-cycle’ cost curve (above) represents new production only at a well, rather than at a project, level. Companies use ‘full-cycle’ economics (which include other expenses) to assess the economic viability of new drilling projects.
Second, cost curves do not address how existing production might react. For this, we turn to EIA’s Annual Energy Outlook. EIA scenarios which imply that if prices reach and stay at $70/bbl, annual growth of 630 kb/d by 2017 would be cut by 180 kb/d each year, net of declines.
Third, expected improvement in service costs will be another important determinant for the breakeven price of tight oil supplies. Oilfield services sector cost inflation has plateaued and stands to improve further in the coming years. This means that the cost curve in a year is likely to be up to $5/b lower on average. Permian D&C costs have declined from $9-10mn in 2012 to $5-7mn today.
OPEC producers have low production costs (in Saudi Arabia, even as low as $4/bbl), but will feel the heat fiscally. Still, tight oil producers are likely to be first affected in a low price environment.
Companies are likely to react very differently regarding their market capitalization, hedge ratio, and ‘oiliness’ of output. We estimate that small and mid-cap E&Ps(accounting for 880 kb/d oil and NGLs) would see earnings cut by 17% in 2015 at $80 and by 25% at $70/b, which would likely lead to a cut to capex and drilling plans in 2015. Adding production from infill drilling, drilling in new areas, and enhancing recovery rates from existing wells would add output but require different levels of capex. Wells already online would not be affected, in our view.
* * *
So much for Saudi cooperation...
- *SAUDI'S NAIMI SAYS OPEC DOES NOT CUT OIL PRODUCTION
And now back to the old "plunging oil prices are good for the economy" spin cycle.
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Dow futures up guess Chevron and Exxon aren't in it LOL
Is that what caused the 13 point spike in the NASDAQ?
DavidC
We welcome with open arms the era of abundance and basic income.
So tell me again how the Spy stays elevated with energy weight at 30%.....
No manipulation here....
Shale oil bubble burst and western economic collapse in 5...4....
Hate to say I told you so yesterday, but I told you so yesterday!
The House of Saud is playing chess, Americans playing checkers AGAIN!!
This bitch is going to $35-$40, then will see how the bankrupt, over leveraged, USD, fake recovery in energy crowd, sleeps at night!!!
My guess will be, not so good, and massive bailouts 2.0 dead ahead!!
So Americans want to be in the global energy production game in the 21st century, well, boys, your there, what's your next move?
Another bailout is exactly what the US elite wants and needs to keep the game going. Otherwise how would we restart QE?
Nah, renew, IMHO: The sauds were/are goat herders, they play soccer on horses with a headless goat for crying out loud.
All they have and are, misogyny included, is based on Western Technology.
They have nowhere else, safe, to goto, to make technology and finance; work.
So that they can continue their thugocracy in the style they have become accustomed to.
Same for the Chicoms and Russkicoms, Indiacoms, and Braziliacoms; except for the goat soccer.
All their cultures, of corruption, are incompatible, with each other and the Western work ethic.
The Oil Corps and their banksters could squash the sauds, any sheeple, social networks, and blogs, if
they were so inclined, like bugs.
They are used to playing chess with each other even since the era of caravans, on top of camels, without using chessboards and pieces...
The House of Saud can't play the same game they did in 1986. Their social and physical infrastructure costs alone demand that oil be $85+/barrel according to many estimates. They can, however, try to bluff which is exactly what they are doing, and they can withstand the pain of sub-$75/barrel prices longer thant most other opec & non-opec producers alike. Also keep in mind that dropping oil prices only really affects drilling (i.e. new wells). Existing wells (that produce for an average of 40 years) don't stop pumping just because the oil price drops. So, profits aren't just going to evaporate tomorrow for most producers. Granted though that the smaller independents will suffer first.
It is also important to remember the economic benefits derived from dropping oil prices since the entire world IS slumping right now economically. For every $10 drop in the price of a barrel of oil, world economic output increases by almost half a percentage point. Prices at the gasoline pump have already dropped about 50 cents a gallon. That translates to about $500 a year in savings for the average gas-guzzling U.S. household.
My guess is this thing bottoms near $60 (still a significant drop), but it will take something else to push them lower and I don't think even the current bunch of corrupt oligarchs have the stomach for that ... but, who knows ... stupid has a very unpredictable way about itself.
This is just OPEC trying to keep their Oil "Crown" only they are capable of staying in business at sub 80$ prices (xcept Venezuela but who cares), in a free market this would be called #dumping
Russell HOD guess there are no shale plays in it LOL 1195
I don't get it. Something's up. OPEC is shooting themselves in the foot. Why? Who's the puppetmaster? How do the strings get pulled on 12 nations scattered over three continents?
Cui Bono? Not OPEC!
Not true they are simply trying to bankrupt their competition, and nobody likes Venezuela anyway
yes, take advantage of a downturn to bleed out weaker competition.
this is standard practice amongst the big boys, big miners do this too.
North American shale oil definitely can't put a floor under the price. But perhaps a ceiling. Saudi Araibia/OPEC bleeds out the competition and then raises prices again.... all well and good until you get up around $80/bbl. Then North America starts to crank in up again.
I hope at $58, that Cramer gets on CNBC and has another complete meltdown, screaming and crying about how, "no one knows what's going on out there", and the .gov needs to do something, "people are getting killed"!!!
Then we know the big government bailouts are in play!
At $42, CNBC may go dark or have a moment of silence:)
US consumer is going to have a field day. Doesn't look good for the bears... I'm looking at you ZH.
Idiot. The veneer of US recovery totally disappears without shale oil. You buying an extra bag of Cheetoz every week isn't going
to make any difference. OPEC just put the healthiest 9 states into recession.
Average US household gets a roughly $1000 stimulus with oil where it was. It's going lower now. That's all you need to know how good lower oil is.
Yes there will be bankruptcies in the oil sector. But the US is not Saudi Arabia. 70% of GDP is consumption.
It's more like $500.....enough for two extra months hiatus on a subprime auto loan before the repo man shows up. Quit
getting your news from bubblevision.
Lower oil equals lower GDP.....spin and adjust
Lower GDP means layoffs, less spending, more saving,.......
Rinse and repeat!
Keynesian shit show worse scenario!!! (That's called deflation, OMG, I just uttered the word that's worse, then a racist slur, these days)
Have to agree with Silver Short Seller. As long as the U.S. is a net importer of oil, lower prices are positive for the overall economy, despite the temporary dislocation to oil-producing states.
Cheap oil should be even better for China/Asia and Europe (except for Norway).
How is it people such as yourself always put the cart before the horse? Consumption either comes from savings, income, or debt. So Shale industry going under is bad for consumption genius because people have to draw upon debt to maintain consumption levels.
Lower consumer prices (gasoline) raise real incomes.
You think the guys that will lose their jobs will agree with you? Sure consumers pay less for gas but you are out billions in taxable income and put thousands on unemployment. Your argument is retarded. Like arguing that walmart increases GDP because idiots can buy more chinese crap.
Great for bears. A lot of paper just got suspecter. Always good is a faith based system,not.
With this must leverage, even a tiny crack could be fatal.
Shale Oil. The new Subprime.
Enjoy your dinner.
Bullish for shale oil and tar sands...
http://olduvai.ca
Doesn't stop energy deals....
http://newworldorderg20.wordpress.com/2014/11/21/u-s-chevron-enter-joint-project-with-russias-lukoil-in-nigeria/
http://newworldorderg20.wordpress.com/2014/11/20/russias-gazprom-already-part-owner-of-so-called-alternative-energy-sources-for-e-u-energy/
http://newworldorderg20.wordpress.com/2014/11/26/turkey-and-russia-to-increase-blue-stream-gas-supplies-by-3billion-cm/
http://newworldorderg20.wordpress.com/2014/11/26/russia-has-signed-nuclear-agreements-with-ukraine-turkey-existing-finland-south-africa-india-algeria-argentina-vietnam-bulgaria-existing-belarus-existing-iran-and-u-s/
http://newworldorderg20.wordpress.com/2014/11/26/iran-gets-crude-oil-payment-from-south-korea/
http://newworldorderg20.wordpress.com/2014/11/26/russias-rosatom-to-continue-cooperation-with-u-s-of-course/
the last time wti went below $80 it stayed there 6 months, the time before that it was a year. don't think it will stay below $80 for more than a year this time either.
buy low, sell high. this is a must trade. move asap and keep adding to your position if it drops more.
i am a producer not a speculator. sell high is always my goal.
Golly ... to think oil was an inflation-adjusted $ 46.60 just a decade ago. So how much unsustainable sovereign debt was piled onto less developed nations since then ? .... assuming $100 oil 4-eva ? oh, the humanity !
OPEC may have decided they are happy with a price that sits below shale production cost for a while. Since growth is dead, they may decide to trade a lower price for greater share.
meanwhile Russia and China a are stacking like crazy
BURN!
Saudis?
Most hated nation after Israhell.
Both nations accomplices to 9-11, and both nations allegedly our allies.
Fuck them both.
Russia can't afford to cut producion, says Bloomberg.
http://www.businessweek.com/articles/2014-11-26/russia-wont-cut-oil-production
Saudi Arabia may or may not choose to cut production as a geopolitical ploy to weaken Russia, and by extension, Syria.
But, according to ueters, if OPEC cut production, the cartel risks losing market share to the US tight oil/Canada tar sands revolution, which is itching to export oil. Here's the quote and link:
"Cutting output unilaterally would effectively mean for OPEC, which accounts for a third of global oil output, a further loss of market share to North American shale oil producers."
http://www.cnbc.com/id/102213999
So maybe the OPEC strategy here is twofold: 1. Hurt Russia, and 2. Hurt the US.
Who will get hurt the mostest fastest? I say the US. Russia has proven its resileincy in enduring hardship. Candy-asses in the US- not so much.
Has anyone noticed that Russia has the energy doomsday machine?
What if they start pumping more instead of less. What house of fiat cards would fail as a result thereof and who would benefit from the resulting monetary mayhem?
The people who know what it is to live on potatoes, stock piled lots of physical gold, have their hands on the European natural gas spigot and would be happy to see the NWO financial order topple?
Could be quite the shitstorm for USD.
He certainly is holding a big card that the MSM ignores completely. And he is in a very foul mood when it comes to the NWO. All we keep hearing about is what the Howdy Saudis will do next.
WB7, you are on the righ track...everything else is smoke and mirrors.
The US suppresses everyone, espeically those that delve into real money (aka gold). It has been a fight with Russia for a couple of years...now it will be interesting to see if they strike back.
Could use a visual from wb7 of what happens when Russia only accepts payment in gold for oil and gas.
a doomsday machine is only effective if you tell people about it
Who gets hurt mostest is whomever is leveraged the greatest...est.... That's prolly the US, but since they have their finger on the button, doesn't matter.
WTI oil showed lower back in the summer
http://bullandbearmash.com/chart/wti-oil-weekly-reverses-sharply-remains...
USD strength will keep pushing commodity prices lower
Venzeula stormed out -and sold 100000 crude contracts.
The former 'swing producer' has become a 'strategic producer'.
Lets see how long the smiles stay on those Saudi faces when Russia turns Riyadh into a glass parking lot for efforts like Volgograd and then Ukraine.
Didn't realize the Saudi Royal family had such a profound desire to be turned into ash just like their friends in the Knesset!
panic over all US futures back green, funny thought they were closed today LOL
The burning question- are lower oil prices a sign of deflation, or is this simply a geostrategic play, which will, as the saudi dude said, rectify itself shortly?
Yes, sustained lower prices will HY yields higher. This will cause an uptick in bond yields generally, as restructuring (default) consumes the shale oil bubble, with ripple effects. Higher interest rates will cause a general squeeze on liquidity...
QEIV, here we come!
Saud means business.
And the US and Putin can lump it or dump it.
India and China are having a hard-on.
Bollywood will have a strong year as Indian optimism hits kama's sutra.
Not so sure about Texas long horns.
Oh yeah, cheap oil will be bad for hay prices, ref the McCormick No.9. $120/ton and falling.
Nothing runs like a Deere (ing), said the Fendt guy ; )
One step towards re-tooling away from fossil fuels and capturing markets. Result? Political Power. LULZ
Old Manor Farm Haymaking
Two Fendt tractors tandem ploughing
Banker: Happy Thanksgiving!
Oil Wildcatter: Why do yo say that?
Banker: With WTI below $75, all your oil is belong to us.
Oil Wildcatter: And you stole my shitgum, fukker.
Banker: Pass the cranberries and STFU.
"But, but, but... all the clever talking heads said they wil have to cut..."
lol
oh look, they came out announcing exactly what I said they would... no cuts, no cuts, and NO FUCKING CUTS
hell they'll cheat on top of that, it's like watching a ball of rats eat each other to survive
Oil prices started the collapse back in July, just sayin.... This is the cherry on top of giant asswhoopin.
http://finviz.com/futures_charts.ashx?t=CL&p=w1
"no one saw this coming"
I'm usually all for free markets but with the Saudi dumping oil in the market it would be nice to see the federal government give the shale producers some kind of tax break/incentive to to lower their cost/barral
Oh, sorry I forgot, what is in the best interest of the economic condition of the country is way down the list of priorities for this administration.
Just who do they think they are, John D. Rockefeller?
Love to see the Venzuelans take it in the socialist shorts....we caught some of their army crossing into our country last week..two times....probably just buying toilet paper....one of them had to cross a bridge...pretty obvious border..and when they were caught they said they were lost..lol....lost...commies never lie very well...
Wonder what Putin thinks of this? Would he be willing to play the long game like OPEC is clearly aiming for?
My guess is probably. Sub $70 is going to kill US oil, and the Ruskies will mop up in 18 months when the price boomerangs on shortages from lack of new exploration.
There are going to be some very pissed off strippers in North Dakota when they start shutting this boom down....
US futures (althoughthe US is closed) new all time highs on this fab news.....LOL
So is this the next credit event to be declared a non-credit event by ISDA?
Don't be mislead -- great buying opportunity in shale HY credit!!!! Buy it on the cents and flip it to the Feds in their upcoming QE round. Winning!
a 20 Y/O friend of mine is in ND working in the oil fields. He's knocking down $4k/week no education...just a hard working average guy. He came home for the weekend and told me his long term plans are to work for 5 years and then retire. lmao. Guess he's been whacking off, cause he said the female/male ratio is about 40:1....and that 1 was mostly fat chicks working the McDonalds and Bars. I told him he needs to head on over the the Reservation and pick up one of those fat pole dancers. He said the boom is here forever.....no end or slowdown in sight.
If oil continues to drop, which it will, he will be out of a job unfortunately. The USA doesn't allow any working man to retire in 5 years without putting in about 40 years of tax paying work. Thats the game played.
67.72 and the fucking Dow is still at record highs, guess all US oil stocks will gap up tomorrow....?
One thang, well, maybe two or more.
"historical analysis" is based on what data? 'Cause, none of the data is a lie, been manipulated and or all three.
"metrics"- ahh, you mean HFT's, derivatives, Tarp, lies, dam lies and statistics, oil reserves, full parked tankers. Right?
Several decades ago, when I was strong enough to be a fracker, the Saudis stated, and did at one time, they could produce
23 million bbls/day, no sweat. The saudi's oil wells then were drilled, completed, and put on line in 10 days and averaged 25k bbls/day.
So at the end Bernake was right and inflation is needed to have jobs! It seems although as bad as inflation is because of the quantity of money thrown at the companies it does create jobs. The only problem i see is that it's not sustainable and when money flow and inflation stop, the fall is more painful!
The quality of US shale oil is CRAP. But even worse is the effect it is having on potable water supplies in the US. Just last week California permitted a shale oil producer to dump millions of gallons of fracking waste water into a clean aquifer thus ruining millions of gallons of potable water. This whole fracking idea was bogus from the start. Russia has Putin we have the SINGLE PARTY SYSTEM, who is better off?
Happy Thanksgiving to all American ZH readers!!!
Thanksgiving And Your Father’s America
Looks like we're going to have to bail out the too big to fail oil companies AND the big banks again.
Marge, where's my checkbook?
Saudi Refineries to go up in smoke? Sandwiched between the Red Sea and the Persian Gulf!
Jeddah, Yanbu, Medina, Robigh, Abqaiq, and the Duba Port.
The Saudis are now considered a renegade state amongst OPEC... they must be stopped along with their coconspirators, UAE & Kuwait!
This is a no-brainer with ISIS camped out beteen Lebanon and Syrian Mountains & Rivers.
Egyptian 'Muslim (MB) Brotherhood's'... driven underground by Sisi, have been joining up in droves with affiliates of radical groups such as ISIS. Note: The MB has thousands of followers in North Africa, East Africa and their border states.
Look for Port Said and Adabiya Port of Egypt to become flashpoints along with Port Sidon of Lebanon.
Funny how times change? It was when SA nationalized ARAMCO in 1980-- that started the American Energy Program along with other energy consuming dependent nations to ween off ME Oil! It was created ironically by Saudis cutting production. Yet today they're doing the opposite by increasing supply to destroy once, and for all, ours and others that followed the alternate energy programme to capitulate.
Ain't gonna happen! Shiekh Bandar(BUSH?!?) should be sent to the gallows for beheading by hemp`rope on a fifty-foot oil platform. http://en.wikipedia.org/wiki/Abqaiq
http://www.bing.com/images/search?q=saudi+arabian+pipelines+and+pumps&qpvt=saudi+arabian+oil+pipelines+and+pumps&FORM=IGRE
jmo
I'm surprised tha, given all the trouble they're causing Russia, some of the top Saudis haven't died mysteriously or been suicided.
Believe it or not?, the Russian's have no problems doing business with Israel.
Turkey under Ataturk had no animousity towards any religion (secularism) other than the fact that he was basically a closet atheist? His short life (died at 58 years young) was that of bringing the Turks out of the dark-ages of the Ottoman & Young[?]Turks Theocracy, and into a quasi-western society. He admired western culture. This is why he trashed the Caliphate and dissolved the Islam state of Turkey. His concern was for making his country a symbol of Freedom for all. He had no ambitions for conquest other than regaining the land confiscated by the Versailles Treaty which was moar harsh upon Turkey than the German's!
The Dardanelles, Aegean Sea, Maramara Sea and the prized Bosphorus are still the most valuable (Black Sea) seascape in the whole of the Mediterranean western basin trade. (What greece got to do with it?)
Russia cannot survive without the Ukraine. It is just to valuable to give up. They would virtually be boxed in? This is precisely what causes World War's, Period! Note: It is a landbridge to Asia & ME.
This is in turn was quite similar regarding Egypt's Nasser? He was fed up with the Muslim Brotherhood and religious fanaticism regarding Muslim Law. He wanted separate State and Religions. The MB tried to assasinate him but he had them bannished. Nasser and Ataturk both realized that the Mullahs didn't give a fuck about the people, but just maintainging power.
But, unlike Attaturk, Nasser was a bit too ambitious regarding Egypt's future, as being the epicenter of the 'Arab Republic' and Army for the Entire Middle East. Although, I myself discounting all his political/ foreign/ commerce miscalulations... he was a true visionary! Indeed, quite similar to Americas' George Washington...
Summary: Egypt is stuck between a rock and a hard place-- overpopulation and all dessert with no natural resoures. Sadly, Egypt cannot ever think independently being financially beholdened to Saudi Arabia and other Strict Muslim countries which supports it's hypocracy (Note2: The MB over the last decade has done much for the poor and illiterate regarding farming and self-subsistance) and the recent dethroning of Morsi.
Turkey 'had' a fantastic geography with a wonderful future if they have gotten rid of the anti-Kemalist and stopped Erdogan's anti-secularism. But immigration worked in their favor allowing Muslims to migrate in the droves in the last twenty years giving the Erdogan an easy win every term. Problem is that the demographics (think of the democratic party and amnesty?) in easten Turkey (Ps. Turkey borders eight countries) is growing exponentially with the Kurdish population gaining a huge voting bloc. But, wait... what better way to get two bird's with one stone than to fight a war (create?) with the Damascus shia-Alawite gov't on the borders and drawing into the fray their hated nemesis Turkish Kurd's in east Turkey [and beyond].
Ps. This is just some fodder regarding how Turkey will get dragged into another World War if it doesn't get it's head out of its ass, and realize that the Ottoman Empire is long, longer, longest, been relegated to the ashheap of backwardation history.
Ps2. Both Nasser (Infrastructure & Agraian) and Ataturk believed wholeheartedly in moderization and self-sustaining themselves from exogenous events with state-of-the-art industry's with its vast natural resourses.
jmo
Grab a bucket of wings and a six pack. This has the makings of good theatre.
Grab a bucket of wings and a six pack. This has the makings of good theatre.
(Reuters) - Iran's dependence on oil revenue is putting the Islamic Republic's economy at the mercy of major powers, Supreme Leader Ayatollah Ali Khamenei said on Wednesday.
With oil losing a quarter of its value since June, President Hassan Rouhani's administration has been scrambling for alternative sources of income.
Iran's budget is based on oil priced at around $100 a barrel while Brent crude LCOc1 is currently below $87.
Hitting prices is abundant supply as well as concern that slowing economic growth in Europe and China will soften demand.
"Running our country on oil revenue leaves Iran's economy at the mercy of major policymakers in the world," Khamenei said, referring to the sharp drop in oil prices.
"It is all but obvious what future lies in store for such a country ...Instead of relying on its mineral resources, Iran should rely on the talent and potential of its youth."
"Only then would Iran's economy become immune to the influence of powers," he said.
http://www.reuters.com/article/2014/10/22/us-iran-oil-economy-idUSKCN0IB...