Oil Jumps To $56, Highest Since July 2015 On Saudi Turmoil, Venezuela Default

With the launch of electronic trading, WTI crude has jumped from the highest close since July 2015 amid Saudi turmoil which over the weekend included a crackdown on 11 Saudi princes - including billionaire Alwaleed - and dozens of current and former ministers as Saudi Crown Prince Mohammed bin Salman, i.e. MbS, who’s backed policy of capping oil output to raise prices, consolidates power with anti-graft probe, and shortly after a helicopter that carried 8 high-ranking Saudi officials inexplicably crashed near the Yemen border

Adding to the upside pressure are concerns about Venezuela's viability, following Friday's default-cum-restructuring confusion, which sent PDVSA bonds crashing on the realization that the long-deferred sovereign default may finally be inevitable.

As shown in the chart below, December WTI briefly touched $56, and was up +0.5% to $55.87/bbl shortly after 6pm ET, the highest price since July 6, 2015...

... while January Brent was also higher by 0.5% to $62.39/bbl.


fearnot Sun, 11/05/2017 - 18:27 Permalink

Smoking guns – Prince Alwaleed bin Talal, Trump, and Central Bankers Saudi Central banker Chief (SAMA), Saudi Finance Minister, Chairman of Saudi Stock Exchange (Tadawul), CEO of Saudi Telecom, Chairman of Saudi Capital Market Authority (CMA) all met on November to discuss three main topics including the regional integration into the world economy, tapping capital markets and driving diversification in the regional macro-economic environment. I got to wonder if Alwaleed bin Talal and the others the Crown Prince Bin Salman took under custody or eliminated has something to do with throwing the petro dollar under the bus. Is the U.S. an ally of Crown Prince Bin Salman? I think not.    http://m.tradearabia.com/news/BANK_332281.html  https://www.thestreet.com/story/14365366/1/the-world-in-transition-the-gcc-board-directors-institute-hosts-its-5th-annual-chairman-summit.html  "Trump’s financial history with Saudi Arabia, which is leading the blockade, and Saudi ally the United Arab Emirates, includes the purchase of tens of millions of dollars in Trump’s real estate properties by wealthy Saudis over the years. The situation raises questions about whether the president’s personal financial relationships are dictating US policy, rather than his stated claims that he is concerned about Qatar’s alleged link to terror financing" "There is no evidence that Trump has been untruthful about his reasons to support the blockade. But the US State Department and the Pentagon – acutely aware of Qatar’s role hosting thousands of US and US-led coalition forces on a large airbase south-west of Doha – have taken different positions from the White House. A State Department spokeswoman recently said that the Saudi and UAE move against Qatar was “mystifying”." Read more "It is clear that Trump does not have many business connections to Qatar. His son-in-law, Jared Kushner, reportedly sought but failed to entice Qatari investors to help recapitalise a huge investment in a New York property – 666 Fifth Avenue – that is laden with debt. Saudi Arabia, however, has been an important partner to the president. In 1995, when Trump was struggling to make payments on one of his most important New York properties, the landmark Plaza Hotel, it was Prince Alwaleed bin Talal, a Saudi prince, who came to his rescue with an investment, which relegated Trump to a minority shareholder in the property. A few years earlier, in 1991, bin Talal bought a huge yacht, the Trump Princess, from creditors at a time when Trump’s other big venture, the Atlantic City casinos, were under pressure.  It does not mean the two have always had a warm relationship. The Saudi prince fired off an angry tweet in June 2016 after then-candidate Trump called for a ban on Muslims entering the country, describing the president as a “disgrace not only to the GOP but to all America”. When Trump won the presidency bin Talal congratulated him" https://www.theguardian.com/us-news/2017/jun/23/qatar-diplomatic-crisis-what-are-trumps-financial-links-to-the-region

Schlub Sun, 11/05/2017 - 18:33 Permalink

Nice (not).... Until THIS, the "narrative" around here was needed repairs to drilling and refinement equipment... Like if Pizza Hut forgot to order mozarella cheese in a timely manner, so now the same pizza is 35% more, lol. A total bullshit, ridiculous "business model". Nobody but Petro stays in business like that, ever.

adr Sun, 11/05/2017 - 18:42 Permalink

What really gets me is if oil was falling from $70 and hit $56, we'd have gas around $1.75, instead since oil climbed past $50 we have gas at $2.75.The hurricane induced RBOB bullshit led to a $.70 surge in prices that has persisted for two months. Instead of allowing gas prices to fall, and keep the Nov and Dec contracts sub $1.40, the manipulators drove those contracts above the Oct contract close, thus preserving profit on contract rollover. So evem though oil prices are still at a level that should give us sub $2 gasoline, we are in real danger of having sustained $3.00 gasoline in the winter with oil under $60 and record storage levels and near record production. The insanity continues unabated. 

Jack Oliver Osmium Mon, 11/06/2017 - 00:51 Permalink

Here (in Australia) we are paying $1.70 a litre - which equates to $7.60 a gallon !!

We have shitloads of CNG - which we are virtually giving away to China !

I have said before - for over 20 years - Russia has been building (CNG) pipelines to Europe and beyond !!

They KNEW this day was coming !!!

In reply to by Osmium

Yen Cross Sun, 11/05/2017 - 19:08 Permalink

  Getting ready to short CL, but it's probably going to climb up to those stops @ the $60.00 handle. Should be interesting, as I expect additional $usd strengthening into EOY. [ the price increases certainly aren't demand driven]

VW Nerd Sun, 11/05/2017 - 20:54 Permalink

With the oil price on the rise, I guess the Russian/Iran sanction plan is down the toilet.  Doubt Putin or Iran will be feelin any pain too soon.  With oil trade notes soon being denominated in Yuan, redeemable in Gold, I'd say the Eurasian axis is sitting in the catbird seat!  I'll watch the Euro next week.