Oil Bulls Concerned By Russia's Failure To Cut Production

Tyler Durden's picture

If record US crude and gasoline inventories (and soaring US production) were not big enough concerns, oil bulls are starting to lose faith (hedge fund shorts at 12-week highs) after lower growth targets in China and concerns over Russia's compliance with a global deal to cut oil output sparked renewed worries over a crude oil supply glut.

Reuters notes that China on Monday lowered its growth target for the year to 6.5 percent, compared with 6.7 percent last year, and also tightened regulatory controls in an effort to tackle pollution. Investors are watching the moves carefully for signs they could dampen demand for oil.

Meanwhile, figures from Russia's energy ministry released last week showed February oil output was unchanged from January at 11.11 million barrels per day (bpd), casting doubt on its moves to rein in output as part of a pact with oil producers last year. Commerzank noted that Russia's production would need to fall by a further 100,000 bpd in March in order to comply with the agreement.

And it appears hedgies are starting to lose faith...

 

And while prices are rebounding modestly today (as the machines buy the dip again), the recent trend is clear. The China demand, Russia supply concerns outweighed news of escalating violence in North Africa that sparked questions about oil exports from the region and prompted a small price rebound on Friday.

"It's a market where there are no signs of extreme tightness," said Olivier Jakob, managing director of PetroMatrix. "It makes it hard to get a sustained rally."

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SpanishGoop's picture

"a global deal to cut output"

So where is that green line going to ?

 

Looney's picture

 

Damn Russians again! How dare they not to cut production so WE can add another dozen of rigs?  ;-)

Looney

SpanishGoop's picture

Everybody has to cut, except US.

 

Looney's picture

 

Yeap! That's why it's called a GLOBAL deal.  ;-)

Looney

Tarshatha's picture

yep, forget inventories and a world wide slow down, it must be the Russians.

 

Turin Turambar's picture

"a global deal to cut output"<?>

"a fed inspired jawboning about mythological cuts"

There... I fixed it.

crossroaddemon's picture

And this is a problem why? Cheap is good. If the shale producers can't operate at the going price I fail to give a single fuck. 

max_leering's picture

shale, schmale... I give less than a single fuck

Anarchyteez's picture

...I don't give a frack either.

just the tip's picture

translation:  send all those drilling crews, production crews, field engineers, and maintenance crews to the unemployment line.  50,000 more is just a drop in the fucking bucket.  spread the wealth.  when we hit 100,000 past due mortgages then we'll be talking some real fucking money.  YYYYEEEEEEEEEHHHHHAAAAAAA

Davidduke2000's picture

Putin strategy is drive saudi arabia out of business, Russia has oceans of oil that can last 500 years, it's a country with untapped resources, but saudi need the money for the lavish life style and to control the people otherwise we will see royal heads roll in the Colosseum. every time I dare to think Putin reach the highest level of intelligence he come up with something smarter. I hope this man will stay president for the next 20 years to make sure Russia is safe. 

PopTheBear's picture

Yea I dont know where you get your facts here but they seem to be from ur anus. If russia really wanted to hurt Saudi they should just overflow the market and drive prices down to $30 again. Why aren't they? That's the real question here I think. I think they want to be on Saudi's good side for a while until everything cools down in Syria. Paying lip service and cheating as much as they think they can get away with for now.

Rebellion97's picture

Who gives a shit what happens 500 years from now, Russia is hurting just as bad as Saud, why do u think Russian minister Novak is all over their cuts. The Saudis need oil up for aramco ipo as well, be interesting what happens in Texas this week.

max_leering's picture

sell all the oil you got Russia... you really need the free cash flow, and it's not like there's anybody around to challenge you these days... oh, and screw OPEC

Atomizer's picture

The fear of petrodollar recycling scare. Many hedge funds are going to go tit's up. 

Herodotus's picture

Trump needs to order a cut in US production.

buzzsaw99's picture

the frikkin russians are frikkin everywhere i tell you. i think i saw one lurking behing the magnolia this a.m..

Youri Carma's picture

Statoil CEO Says Break-Even Cost Down to $30 Per Barrel
Mar 6, 2017 Bloomberg
https://www.youtube.com/watch?v=voMhgu82Zzk

Eldar Saetre, president and chief executive officer at Statoil, discusses the market impact of OPEC's output cut, his company’s positions in the U.S., and the decline in their break-even costs.

Investors Start Doubting Oil Rally After Failure to Top $55
https://www.bloomberg.com/news/articles/2017-03-06/investors-start-doubt...

- Money managers’ WTI net-long position slips from all-time high
- U.S. crude supplies rise to record; output keeps growing: EIA

U.S. Oil Industry Becomes Refiner to the World as Exports Boom
https://www.bloomberg.com/news/articles/2017-03-06/u-s-oil-industry-beco...

- U.S. gasoline overseas sales hit record high on Mexican demand
- China, India, Mideast refiners fight for emerging market share

PopTheBear's picture

Thank you for the tidbits!

Dr. Engali's picture

Fucking Russians.

Son of Captain Nemo's picture

Maybe if we got out of Syria and Ukraine the Russians wouldn't have to use their leverage as the #1 oil and gas producer in the World today in this way?...

As an American... "Pining" for the Glory Days of reliving 1971 and "WHAT IS NOT" 46 years later due to our own unbridled stupidity destroying oil fields through our proxies in Syria that "makes no sense at all" other than to say if I can't control it then Nobody else will...

As for the Russians... I say "FUCKING A"!!!

just the tip's picture

why, of all the fucking years did you have to pick 1971?  i graduated in 1971.  and i'll pine for and relive those days, glorius or not, until the day i die.  rita evans had one hell of a rack.

PoasterToaster's picture
PoasterToaster (not verified) Mar 6, 2017 10:44 AM

If you're sitting around praying for less so that you can make more, then you are on the wrong side.

NoWayJose's picture

After seeing $40 and below for a year - every producer and exporter is pumping balls to the wall at $55! No matter what they actually 'say'.

directaction's picture

Be patient. 
Peak oil will soon reduce production.
Life will then get very interesting, very competitive, very dark.  

PopTheBear's picture

No. Proven reserves will last us until 2040 at least, not counting electric and self driving car revolution on the way. If you are sitting around waiting for peak oil it may be a long wait. Nobody really knows how much the saudis have either, they are very secretive about that. That may change with the SaudiAramco IPO though...

El Hosel's picture

So, you are saying fundementals still matter? LMAO

veeger's picture

i wonder what the " oil bulls " concern was when the u.s. and their lap-dogs flooded the oil market to try to harm the russian economy ?   ....damage to the russian economy was so very important even if it meant damaging our own , and our lap-dogs economies...........full speed ahead, destroy russia !!!.dam the torpedoes.....

To Infinity And Beyond's picture

US production is climbing to all time highs while we expect Russia to decrease theirs?  Who thinks of this shit. No wonder the world is telling us to go take a flying leap.

cowdiddly's picture

Russia is not a member of OPEC and probably never will be Reuters gurus. They can do whatever they want.

Conax's picture

 

Cheaper gas, cheaper plastics. yay.

The Russians do what they want same as we do what we want.

Western "leaders" shouldn't have spent years demonizing the Russians if they wanted favors from them. Most of us learn this principle in our pre-school years.

Caloot's picture

Production cuts are  2 fingers in a dyke.

sinbad2's picture

Why would Russia cut production, so US producers can increase production?

Russia and Iran, will keep oil prices at fifty bucks or below, until the US economy implodes, from their perspective, it's good business sense. If the situation was reversed, the US would do exactly the same thing.