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OPEC - As Expected - Maintains Production At 30 Million Barrels, Crude Pops
When OPEC did not cut production last November, the oil market collapsed in shock and awe that the cartel would not just give in and allow non-OPEC members to walk away with market share. Today, in Vienna, "exactly as expected," OPEC once again confirmed production will remasin at 30 million barrels per day in the face of the global oil glut and prices for WTI and Brent have jumped $0.50 to $1.00 (we presume on machines and removal of a worst case boost to production).
Saudi oil minister Ali Al Naimi described as an “amicable” OPEC meeting.
Prices wer weask going in and have reflexively bounced on the news that this was not a worst case scenario boost in production...
“No surprise, exactly what was expected,” says Marina Petroleka, head of oil & gas at BMI Research, after the OPEC decision to leave its output target unchanged. According to Ms. Petroleka, the cartel’s 30 million notional production target remains, but production will remain well above it – especially in the summer months as Middle East produces more to meet higher domestic demand.
“Eyes are now to the next meeting in end November, depending on what happens with the Iranian nuclear negotiations. The next meeting could be where a lot more internal negotiation and change of policy may need to take place,” she said.
But as OilPrice.com's Nick Cunninghasm asks, if the West and Iran can sign a comprehensive agreement that leads to the removal of sanctions on Iran, how will OPEC respond to the prospect of a flood of new Iranian oil?
The oil majors are all highly interested in jumping into Iran. In Vienna for the OPEC summit this week, executives from Royal Dutch Shell, BP, and Total all expressed interest in the oil and gas reserves in Iran.
“Iran is a wonderful country with a fantastic resource base,” Shell’s CEO Ben van Beurden, said in an interview, according to Bloomberg. “As soon as there is legitimate opportunity, we will be looking at Iran.” He is not alone – he went on to add that “everybody” wants to go into Iran.
Of course they do. Iran is sitting on top of an estimated 157 billion barrels of oil – around 10 percent of the entire world’s oil reserves. It also has the second largest reserves of natural gas in the world. And a lot of that remains underdeveloped due to a standoff with the West that dates back decades. The rapprochement with the West over its nuclear program may change all of that.
Falling oil prices and crippling sanctions have taken their toll. For that reason, Iran is eager to put sanctions in the past and quickly ramp up oil production. Estimates vary over how fast and how significantly Iran can increase output. Iran has boasted about putting 1 million barrels per day back to work immediately after sanctions are lifted, but perhaps a more reasonable estimate is 400,000 barrels per day in the short-run.
In order to get to the next level, however, the Iranian government believes that it needs private multinationals to provide both the capital and technical expertise. The Iranian government is reportedly looking to revise the terms of oil contracts that it issued in the past in an effort to make investment more attractive. Rather than merely paying a sum to private oil companies for producing, Iran is considering doing something that it once opposed. It may allow the oil majors to take a share of production and book the reserves, which would be substantially more enticing to private companies than just a fixed fee.
That would certainly lead to heavier interest from the oil majors, which eventually could result in much higher production from Iran.
That begs the question, how will OPEC – which is meeting this week – accommodate a possible flood of new Iranian oil? Most analysts see no change in OPEC’s output quota this time around, keeping production unchanged at 30 million bpd. But in just a few weeks the negotiations over Iran’s nuclear program wrap up, possibly portending an end to sanctions.
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Never mind crude.
It's hammer time!!!
OK, so let me get this correct, the supply glut is to continue, but prices are rising?
Am I the only one confused by this?
The "glut" of WTI crude has been declining for over a month.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPC0_SAX_YCU...
You believe any data from the EIA? Really?
Yearly reported miles driven are seasonally adjusted. Car sales are seasonally adjusted. Every other fucking thing is seasonally adjusted which basically means completely made up with no semblance of reality.
There hasn't been any uptick in real demand since last year, so the glut will continue. The big players are moving oil around to make it look like there have been drawdowns on inventory. The same barrels of oil are being transported to different storage locations over and over.
In the consumer product business it is called inventory shift. You ship inventory from stores in one area to others. It makes it look like inventory is selling, but in reality it is just shuffling what you know will never sell so you don't have to take it back to your warehouse.
Did you believe the EIA when it said inventory was rising? If so, why don't you believe them now?
This idea that people are moving oil around is the lamest, most fatuous idea yet. Why would anyone pay money to ship oil around and thus lose money on each barrel of oil just in order to "make it look like there have been drawdowns on inventory"? First of all, the inventory from all the 5 PADDs is summed and if it drops in one place and rises in another, that is netted out. The way inventory moves is from crude storage to refinery to refined product storage. Gasoline inventories are dropping even though production is higher than a year ago. That means demand is growing. Your argument is specious but that's because you read it elsewhre and repeated it without thinking as so many who post here are prone to doing.
As far as inventory being moved around in retail stores, that happens because some inventory sells better in one geographical region than another. It's a pretty common issue and plenty of software has been written by the likes of i2 to deal with just such a problem.
Yes the "draw" from 62 million to 59 million over the past five weeks during the peak of refining for the summer driving season. What they don't tell you is that the oil is being shipped to storage in the Gulf Coast, Canada, and the Northeast and imports have dropped, which is collapsing the spread between Brent and WTI. Wait until the refineries slow down in July and are shut down for maintenance again in September for winter blend.
From the EIA chart, inventory has gone from 11.6 million barrels to 59 million barrels. At the same time, WTI oil prices have gone from $37 to $60. Anyone long oil should also be long stocks. Both are driven by liquidity drunken speculators.
Yep, watch the WTI-Brent spread. They are closing to parity which is what OPEC does not want. The refiners are running at about 94% capacity preparing for Summer, but if it sucks this year things will keep going down and storage will start building again which will screw up their market bending badly......
The media spin now is that the oil market was expecting OPEC to increase production from records highs. When OPEC did not increase production, it's bullish for the oil markets. Better than expected. LOL
The crude just keeps coming....it never stops....it just keeps coming Jerry!!!
10 Y 2.41 0+11 keep on rising lol
'All eyes now on next Nov. meeting'....kick the can, same as it ever was.
There are ten people and resources to feed only nine. What happens to the tenth and why? O’ Humanity, Why are you running and for what? Is anyone on this planet trying to solve this problem?
I am working on it because if everyone will be a bystander when who will fight?
http://just-a-thought-from-thinair.blogspot.com/
Read the post titled “No one saw it coming”
Thanks zerohedge for all the good work you do!
Not true, there are resorces to feed trillions but stupid stands in the way. So beasts fight over things that are not and never were theirs. Like ten dogs all claiming the same tree.
If the goal was to solve problems then problems would be solved. So ask yourself why solving problems is not the goal.
Where are these gas stations that are out of fuel?
So this must be another reason to hammer Gold and Silver. No that's just any day in week that ends in Y. Go to ZERO !!!
Club The Cartel
Is Cushing full yet? When will oil be $20?
Because all eyes were on Cushing the big players started moving the inventory they owned from Cushing to other locations. By making it look like Cushing was being drawn down, the price of crude popped. Market manipulation just like everything else.
Do you know how the company Tommy Bahama got going?
In the beginning the company got a 50 store test. The founder used credit cards to buy all of the inventory from the stores. The buyers thought it was amazing, the shirts were flying off the shelves. They placed more orders and the same exact shirts were sent back to the stores. Once again he went out and bought every unsold item. Once again it looked like these were the hottest shirts in the store. The company actually hired "shoppers" to go out and buy merchandise when the test run was expanded to 100 and then 200 stores.
Then the media started getting word of this new hip trend in fashion. By buying their own inventory the company made it look like they were the hottest product out there. When people started hearing from the media that there was a new Hawaiian shirt craze, they rushed to buy the product out of fear of missing out and being uncool.
This happens more than you know.
EVERYTHING IS FAKE. EVERYTHING.
This idea that people are moving oil around is the lamest, most fatuous idea yet. Why would anyone pay money to ship oil around and thus lose money on each barrel of oil just in order to "make it look like there have been drawdowns on inventory"? First of all, the inventory from all the 5 PADDs is summed and if it drops in one place and rises in another, that is netted out. The way inventory moves is from crude storage to refinery to refined product storage. Gasoline inventories are dropping even though production is higher than a year ago. That means demand is growing. Your argument is specious but that's because you read it elsewhre and repeated it without thinking as so many who post here are prone to doing.
As far as inventory being moved around in retail stores, that happens because some inventory sells better in one geographical region than another. It's a pretty common issue and plenty of software has been written by the likes of i2 to deal with just such a problem. I had JC Penney as one of the accounts for my software, I am well acquainted with logistics software packages and how they are employed. I am also well acquainted with how oil gets out of the ground and to storage and refineries. I own several oil wells and grew up in Houston.
Scared bruh?
I tried to help him and his response every-time is Cushing full yet. He believes Cushing is the magical gauge to his inherited wealth. He doesn't realize how people in the know around zerohedge laugh at that comment every-time just like ADR above.
He will have to learn the hard way about little fish thinking they are major players in the sea. I warned him.
I don't want my oil going to Cushing and the reason Cushing is drawing down has more to do with Cactus than anything else. I would much rather sell my oil to the gulf coast refiners than the blenders at cushing.
Why would I be? I have three new shale wells that are pumping at high volume. I am selling timber this week for the best prices in 8 years. Oil has held near or over $60 for the last month. Im doing fine.
Is Cushing full yet? Is the gulf coast full yet? When will oil be $20?
Nothing makes sense anymore. More supply and the price goes up. Just make an informed decision, flip it 180 and you just might be right. Anyone trying to use charts or technical analysis to expalin anything is just guessing like everyone else.
It would help if anlysis would use the proper technicals for their models. But they are still running them like its still the 1960s.
The worlds fraud is changeing so fast even real time is to slow to make an informed decision.
If you want to see whats going on you need to start thinking in credit. Credit doesnt exist, and does exists at the same time. So more credit adds to the money system and makes it grow, removing credit shrinks the money system even though that credit is only access and accounts, not property.
Money systems are controled with this credit, these account entries so that they dont need to add phyisical property into the system.
Its fraud, but somehow everyone is fine with it untill they end up with no property and no credit/accesss. Slave by any other name.
Of course they will keep pumping. The big players are gearing up for WWIII. We cant have war without fuel.
OIL will continue to trek downward for the foreseeable future...
http://www.globaldeflationnews.com/oil-light-sweet-crudeelliott-wave-upd...