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This Month Could Make Or Break The Oil Markets
Submitted by Nick Cunningham via OilPrice.com,
Saudi Arabia announced price cuts to its oil that it is exporting to Asia, in a bid to hold onto market share.
Saudi Arabia’s competitors from the Gulf cut their prices last month, forcing the largest OPEC producer to follow suit. Saudi Arabia slashed prices by $1.70 per barrel, opening up a discount of $1.60 per barrel below the Dubai benchmark.
Although there was little expectation of a shift in strategy, the price cut highlights Saudi Arabia’s determination to continue to pursue market share by keeping production volumes elevated. And if there was any question about Saudi Arabia wavering as prices have failed to recover, the country’s top oil official put to rest any notion that the OPEC leader would alter course.
“Since the 1970s this industry has been experiencing sharp fluctuations in prices—up and down—which have impacted investments in the field of oil and energy, and its continuity,” Saudi Arabia’s oil minister Ali al-Naimi, said on October 2 at the G-20 conference in Turkey, according to Saudi Press Agency. “This volatile situation is neither in the interest of the producing nor consuming countries, and the G-20 countries can contribute to the stability of the market.” In other words, al-Naimi was calling upon non-OPEC producers to cut back production. While not specifically saying so, his comments suggest that Saudi Arabia will continue to seek a rebound in oil prices only by a contraction in production from countries such as Russia, Canada, and the United States.
But Russia is unable to cut production, even if such a move contributed to an increase in crude prices. Russia is already in deep recession, with the economy expected to contract by 3.8 percent this year. Russia is also producing at the highest level in decades, hitting 10.74 million barrels per day in September, according to the Russian government, a jump of 0.4 percent from a month earlier. While there has been a lot of speculation in the media about the possibility of Russia and OPEC coordinating production cuts in order to boost prices, the fact that Russia is producing the most oil since the Soviet era suggests that Russia is not considering collaborating with OPEC.
That leaves few other options for major cut backs in production from market producers around the world, with a lot of attention on North America. In the U.S., production declines continue, although fitfully and inconsistently. After several months of large declines in production, the supply picture has become a bit murky. For example, output fell by 222,000 barrels per day between April and May, and then by another 115,000 barrels per day from May to June. But in July, production actually increased by 94,000 barrels per day. The gains came from the Gulf of Mexico, and not the shale patch. Offshore projects are long-term propositions and don’t respond quickly to shifts in oil prices. However, even taking out the offshore gains, U.S. production would have only declined by 53,000 barrels per day, a slower pace than what was seen in previous months.
Nevertheless, declines are expected to continue. The oil rig count has hit a fresh five-year low, with a huge decline of 26 rigs for the week ending on October 2. According to Baker Hughes, there are now just 614 oil rigs operating in the U.S., down by more than 1,100 from a year ago. The drop off comes after a few weeks of modest gains in the number of active rigs. The rig count could be entering another period of contraction following the recent collapse in oil prices in August. As drillers reduce the pace of drilling further, the high depletion rates of older shale wells will increasingly overwhelm any new sources of production. That means more declines in output in the coming months – potentially at an accelerated rate.
On top of that, October could be a crucial month for struggling drillers. With drillers undergoing credit redeterminations, October could see a wave of debt restructuring and cuts to credit lines, potentially forcing deeper cuts in the shale patch.
It doesn't look "fixed"...
More will be revealed about the trajectory of the U.S. shale industry – and by extension, the trajectory of oil prices – in the next few weeks.
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Yeah yeah yeah. Another make or break date. Most important whatever since whenever.
OT: What will israel "False Flag" to turn Syria into WW#3?
Self-fulfilling prophecy and toss the Mideast shooting gallery in for extra points......
You don't need us to tell you that gas prices are back on the rise!
https://www.youtube.com/watch?v=dCwzw3D-w_k
Sure....I have some more.
https://www.youtube.com/watch?v=HHK7eCCq4VU
Pop quiz....what do we all think about ISIS this morning?
Oil is black gold, texas tea.....Beverly Hillbillies...
https://www.youtube.com/watch?v=NwzaxUF0k18
As long as I can pay less than 2 bucks a gallon to fill my tank I don't care where the oil comes from.
I can pay less than 2 bucks
Where the hell do you live?
$2.09 three days ago....and I thought I was doing really freakin good.
"Could"
Always be aware of that one word (could, should, chance, likely, etc.) in any sentence, especially if you are buying something.
The play is pretty obvious if you care to look. It's part of a larger effort to make Russia collapse (again) including sanctions and war on multiple fronts. Shale is not being taken seriously and is not the target here.
"Saudi Arabia will continue to seek a rebound in oil prices only by a contraction in production from countries such as Russia, Canada, and the United States."
This is a red herring because the United States, even in the unlikely event of an oil surplus, is by law not an oil exporter.
What the 'Shale Revolution' has done is send those formerly exporting to the US to fight for markets elsewhere. To make the US a direct party to the exporter war is to claim exports to the US as an inalienable privilege... However, commerce is not a privilege, but subject to supply and demand.
If Russia, Saudi Arabia, Venuzuela, and the rest fight amongst themselves to supply those who ask for oil imports, that is their business.
But to demand those who do not ask for their imports to change their internal conditions such that they must become importers is simply tyranny.
I might add that virtually all of US oil imports come from Canada and Mexico.
How is it that the US is tarred with this same brush?
How would Russia or Saudi Arabia react if asked to cut production in order to force them to buy imported oil. I can imagine Putin's uplifted finger.
So, why is the US being asked the same?
But Garrrrrtman said on CNBS [yesterday on fast money] that oil has bottomed, time to buy buy buy
Let's see. Russia is kicking the USSA's ass in the ME. Exxon Mobile,BP,and Shell are in controll of the oil fields in a good portion there. Headlines to read: Gazprom kicks US and British oil companies out of the middle east at the same time Russia boots uncle Sam's ass out. House of Saud seeks proctologist to re-tighten spinchter.
This why disseminating information is important.
1. Dude, this is the List of Country in which the USA import oils.
http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_m.htm
It is updated in Sept 2015.
See that your govt import oils from Russia? Even tough many trolls & haters crawl this ZH? Just remember, everytime you're using combustion engine product? (Including electricity)? Thanks Vlad's for giving you that "power's"..
2. RUSSIA, not saudi, is THE BIGGEST Producer of oil (currently),
http://www.eia.gov/todayinenergy/detail.cfm?id=22392
See the DATE on that EIA page??
So, WHO do you think can commands or affected the world oil price, dude??
Read my previous comment. You see the link that said Russia is the BIGGEST HOLDER OF OIL RESERVES IN THE WORLD!
These 2 factor alone? Makes Russia the behemoth oil player of the world.
Read & Learns...
American petrodollar is backed by nuclear bombs
Looking at Hiroshima & Nagasaki ,
America will not hesitate to use nuclear weapons in case the petrodollar is in peril
Besides , when a chimp is in the control room