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Crude Prices Pump-And-Dump After Saudi "Temporary Problem" Comments
Saudi Oil Minister al-Naimi says it is "difficult, if not impossible" for OPEC or Saudi to give up market share by cutting crude production, and data confirmed Saudi crude oil exports rose to 6.897mln bpd in October, up from 6.722mln bpd in September. This was then followed by the UAE Oil Minister confirming OPEC will not change output levels and has no intention of holding an emergency OPEC meeting. However, the crude complex got a boost by ignoring this and anchoring on al-Naimi's comments that, as Bloomberg reports, the global oil markets are experiencing "temporary" instability caused mainly by a slowdown in the world economy, sabre-rattling that increased supply from regions outside OPEC (cough US cough), where oil-production costs are higher, is affecting the market.
Oil prices jumped from $56.50 to briefly break above $59 (as it did yesterday in its spike) before giving it all back...
Saudi Arabia and OPEC would find it “difficult, if not impossible” to give up market share by cutting crude production, the country’s oil minister said.
Global oil markets are experiencing “temporary” instability caused mainly by a slowdown in the world economy, Oil Minister Ali Al-Naimi said, according to comments published today by the Saudi Press Agency. He reiterated the country’s intention to maintain output amid plunging prices.
“In a situation like this, it is difficult, if not impossible, that the kingdom or OPEC would carry out any action that may result in a reduction of its share in market and an increase of others’ shares,” Naimi said, according to the state-run news agency. Saudi Arabia, the largest producer in OPEC, will stick to its oil policies, he said.
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Increased supply from regions outside OPEC, where oil-production costs are higher, is affecting the market, Naimi said. Saudi Arabia’s crude output has remained stable as production in other regions rose, he said.
Saudi Arabia has large enough financial resources to resist the economic impact of the current oil price fluctuations, Naimi said.
The decline in prices won’t last long, Suhail Al-Mazrouei, energy minister in the United Arab Emirates, said today, according to that country’s state-run news agency.
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Is "Patient" or "Considerable Time" same as "Temporary"?
= Infinity = ZIRP = NIRP
But I'm sure somehow they will invent some sly of hand to create some magic illusion like QE4 via operation tokyo twist!
I wondered what was the reason ... i got it now .... thanks for the clarification
Rosnefts loves it.
http://hedgeaccordingly.com/2014/12/russian-oil-chief-denies-rosnefts-ro...
my charts show WTI going to 38
most every trader is fixated on picking the bottom in oil...hense the huge volumes (USO traded more that its entire float 2 days in a row)
judging by exhuberance....this will take months to sort out
OR the global central banks will intervene
Charts are a figment of an over active imagination and don't show crap, they just illustrate the claim but don't provide a bit of proof.
The charts are showing us the surface with the same effect as watching the ocean waves to determine what underwater volcanoes are doing.
Seems like BS press is getting its marching order to pump up the bitch soon.
The market is powered by bullshit, it always has been. Now though its become so deep and wide that reality is no longer in sight.
Lower prices for oil will persist until:
1. higher-cost producers have been put out of business,
2. the credit markets have been punished for their adventures in higher-cost oil, and
3. the global economy begins to recover, with an attendant increase in demand for oil,
or,
4. there is a conflagration somewhere in the meantime that hits supply.
You forgot one.
The ability to lower the price, isn't infinite, you know...
5. Until the Saudi's internal situation degrades from all the decreased oil revenue.
A price war affects every producer equally.
The ability to sustain those effects is what is not equal.
The fact is that ARAMCO and ROSNEFT are not private companies. This means you cannot take their balance sheet in isolation as an indication of their financial status, as you could with a private company.
Russia's currency and its weapons spending and much of its social services are all dependent on high oil prices. To the extent Russia cannot produce oil without the support of those who receive that spending, those are oil-production expenses whether they are on Rosneft's balance sheet or on the general government's.
Saudi Arabia's extensive royal family's investments, and the social entitlements given to every Saudi Family from the government, are dependent on oil revenue. Without the support of those who profit from the investments, or from domestic Saudi's who receive the entitlements, ARAMCO cannot produce oil to the extent it does. To this degree these things are real oil-production expenses whether they are on ARAMCO's balance sheet or not.
This is what is (mostly) different about the goverment-run oil industry from the private frackers in the US. The frackers have to book more of their real cost of production... yes... including their lobbying.
I am not betting on who will give in. Being private companies I am certain that the frackers will not launch nukes in response to the price war - as Rosneft and Putin might. And I am sure that they won't tell their disaffected entitlement recipients that the infidel is to blame for their reduced check, and then send them on jihad in neighboring countries.
So... because two of the three in this Mexican standoff are government-run companies, it is not so simple to understand their real cost-basis or the real range of their possible responses.
Good comments, duly noted. It will be interesting to watch as all of this unfolds.
Venezuala is one of the variables, it might drop out of the market due to internal chaos in the country which could screw up the Saudi game. Watch places like Nigera too, many oil producers on the edge.
Al-Naimi knows the Iran deal is done and he must continue to pump to preserve market share
The saudi's are in bed with the ZWO, little do they know to their own detriment.
The deal as presented to the saudis was something like:
"help us collapse oil prices to poke putin in the eye until he says uncle, and the benefit to you is eliminating your new US shale oil competition".
So they took the bait on that, and it has been very effective in reducing the aspirations of US energy independence to a sea of red ink.
What the saudi's don't know is that the syndicate plans also to have the saudis collapse their own regime as a result of their cooperation after the syndicate pushes prices "too low".
[Saudi regime collapse = "clean break" directive]
im just excited about ZIRP.....when can we haz it?
Saudi Arabia's financial resources are over-blown.
The statement of their ability to last is similarly over-blown.
The financial resources in question are largely in the form of securities.
Securities are already being affected world wide by low oil.
Market makers and the other largest financial institutions previously made large bets on Peak Oil leading to permanent high oil prices.
The value of SA's finances are directly related to the stability of those financial institutions.
FAR MORE LIKELY THAN A POLITICAL CONFLAGARATION will be a market crash induced by those who were long oil, and have to sell securities to cover their long-term positions. A major financial event will put an end to SA's financial reserves, and their ability to continue this policy.
As for the timing of these financial events...
LOOK AROUND YOU. Russia is a serious financial event. The other signs of financial strain outside Russia are already there.
Not long now until production goes down, or such a serious market crash happens that demand for oil disappears...leading to the same outcome by a different path.
Oil was up to $59 but they trot these fuckers out to talk it down. Deep pockets just means they are spending their savings in an attempt to hurt someone else, what a bunch of asswipes these saudis are. The latest well fracked near mine is producing 1500 bbl/day, Al-Naimi can ride back out on the camel he rode in on. What a bunch of noise without action. The real action is in Texas and ND and we are going to bury those saudis.
In a paper-finance-world their 'savings' is subject to the market.
The market is subject to oil.
The 'savings' they are depending on to keep the price going down will evaporate exacty and precisely like the value of a share in Lehman Bro's as the oil price affects the financial world.
Their strategy is not sustainable. The banks are not stable enough to make it work given all of the financial bets already placed on higher oil prices due to all the 'Peak Oil' talk.
The confidence of their 'talking down' the price is all for show.
Unlke you, the Saudi's are literally risking their necks by bringing down the price. It was a desperation move from the beginning, and hence doomed to be short-term right from the start.
In 120 to 180 days the price of oil will be up, or we will all be in the midst of an incipient financial melt-down. Your guess of when the capitulation point occurs is better than mine. But I will say this: A sooner capitulation point lowers the risks from and for Russia, and a financial meltdown in the West. A later one makes them more likely. A financial meltdown is more likely than a geopolitical-military one - because everyone prefers to be poor over being nuked.
But my guess is that if the price is not rising by late April or early May, then a financial crash will be locked-in when that selling-season arrives.
You know. I really ought to charge for this stuff....