Because nothing says 'stability' like a Central Bank in charge of things, the smartest richest men in the world have proclaimed in Davos this week that "we need a central bank of oil, like the central bank in financial world." As long as they are not Swiss, of course. Oil has been volatile today amid these calls for stability after Saudi Aramco comments on cutting projects (supply) sent prices higher, and was then talked back by the CEO bringing prices lower. Oman - the largest non-OPEC Middle East oil producer - blasted that "we have created volatility," noting it was having a "really difficult time," and that's "bad for business," demanding OPEC slow production. But it was The IMF that sparked the greatest concerns as it warned oil producers to treat this oil price drop as permanent noting that they expect these economies to lose $300 billion. only to be contradicted by OPEC's al-Badri who noted "oil prices will rebound back to normal soon."
The rally this morning began with Saudi Aramco comments:
- *ARAMCO MAY SLOW DOWN SOME PROJECTS TO KEEP FINANCES ROBUST: CEO
So less supply - buy... But then..
- *SAUDI ARAMCO COMMITTED AS EVER TO LONG-TERM OIL STRATEGY: CEO
- *SAUDI ARABIA TO MAINTAIN CURRENT CRUDE-OUTPUT CAPACITY: ARAMCO
So back to square one.
Then Davos pipes in... demanding a central bank's stability in the oil markets...
We need a central bank of oil, like the central bank in financial world - Claudio Descalzi, Eni #futureinvest [14] #wef15 [15] http://t.co/chhRWYvemc [16]
— World Economic Forum (@Davos) January 21, 2015 [17]
And then Oman exclaimed...As Bloomberg reports,
Oman, the biggest Middle Eastern oil producer that’s not a member of OPEC, joined Venezuela and Iran in questioning the group’s decision to keep its output target unchanged even with crude prices falling.
Oman is having a “really difficult time” because of low oil prices, Oman’s Oil Minister Mohammed Al-Rumhy said at a conference in Kuwait City.
“I really fail to understand how market share became more important than revenue,” Al-Rumhy said. “We have created volatility, and volatility is one of those words that’s bad for business.”
The 2015 budget of Oman, where oil and natural gas account for 79 percent of government revenue, is based on an average crude price of $85 a barrel, Finance Minister Darwish Al Balushi said in November.
Followed by The IMF's warnings...
- Lower oil price will take $300 billion from economies in the Middle East and Central Asia this year - IMF
- OIL EXPORTERS SHOULD TREAT PRICE DROP AS LARGELY PERMANENT: IMF
And Then the ECB news hit...
- ECB SAID TO PROPOSE QE OF 50 BILLION EUROS A MONTH THROUGH 2016
And then OPEC's Al-Badri chimed in... from Davos
OPEC Secretary-General Abdullah al-Badri said oil prices would soon recover after falling more than 50 percent since June.
"The price will rebound and we will go back to normal very soon," said Al-Badri, addressing the World Economic Forum in Davos, Switzerland.
* * *
"Stability"
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