OPEC: is the writing on the wall? | THE COLLINE GATE

robeiae
Thaumaturge

On a down bound train

Posts: 6,692

OPEC: is the writing on the wall? May 11, 2017 9:13:43 GMT -5 Don likes this

Post by robeiae on May 11, 2017 9:13:43 GMT -5

OPEC has more or less controlled oil prices for decades by acting as a cartel. And this has enabled many of the member-nations--especially in the ME--to amass wealth on a near-unprecedented scale.

But is the game up? OPEC members agreed to cut back on daily production, as a means of driving up oil prices, some six months ago. But the prices haven't gone up nearly as much as OPEC exepcted, mostly because United States producers are pumping as much as they can, as fast as they can (and also because shale oil production continues to get more efficient).

So:

OPEC has asked a favor of other major producers: Please stop pumping so much and help us balance the market.

The unusual plea was issued Thursday in the cartel's closely-watched monthly report, which found that global markets are still suffering from too much supply.

The report said that balancing the market would "require the collective efforts of all oil producers" and should be done "not only for the benefit of the individual countries, but also for the general prosperity of the world economy."

They're mostly asking the US to slow down, but there are zero signs that US producers are listening. In fact, exactly the opposite is likely to happen, as the oil-friendly Trump admin is actively looking for ways to help US producers.

And I'm sorry, but "the general prosperity of the world economy"

Ha. Ha. Ha. OPEC members don't give a shit about anyone else. They want their piles and piles of cash.

There's a lot of crap and stupidity coming from Trump an company, but imagine what it might mean if he could break OPEC's back. Me, I'd stand up and cheer.

Watcha think?

Quote

robeiae
Thaumaturge

On a down bound train

Posts: 6,692

OPEC: is the writing on the wall? May 12, 2017 18:25:00 GMT -5

Post by robeiae on May 12, 2017 18:25:00 GMT -5

A good piece with more details: www.forbes.com/sites/davidblackmon/2017/05/12/opec-still-fundamentally-misunderstands-u-s-oil-industry/#2ee843e57f91

From it:

This current expectation by OPEC that U.S. producers will somehow jointly agree to artificially limit their own overall production also betrays an ongoing fundamental lack of understanding about the nature of America's oil and gas industry.

First, the U.S. upstream industry consists of literally thousands of individual companies, every one of which has its own discreet management team, its own business plan, and its own goals. More to the point, the great majority of these companies are partnerships or corporations, every one of which has its own discreet set of investors it must satisfy in order to remain in business. The thought that these thousands of companies could behave in the same way as OPEC nations, most of whose industries are government-controlled, is not a realistic proposition.

Second, and even more to the point, the corporations among these U.S. companies are legally prohibited by U.S. anti-trust laws to even attempt to engage in cartel-like behavior. It's not legal.

It's kinda funny that OPEC would expect all of these individual companies to decrease production, that they would willingly put themselves out of business to protect nations like Saudi Arabia and Iran.

Quote

robeiae
Thaumaturge

On a down bound train

Posts: 6,692

OPEC: is the writing on the wall? May 15, 2017 8:33:44 GMT -5

Post by robeiae on May 15, 2017 8:33:44 GMT -5

Disconnect?

President Trump’s upcoming visit to Saudi Arabia is a clear sign that the White House is allying itself with Riyadh, as regional power plays between the kingdom and Iran continue to polarize the Middle East.

Most of the media currently seems focused on this angle, on the religious angle, on the nuclear ambitions of Iran, when it comes to the Middle East. But again, the Saudis are taking a huge beating in the oil market, still. And I don't see Trump as the guy willing to alleviate that beating. And yet...it's a huge stick/carrot for him, for the U.S.

Look: www.forbes.com/sites/rrapier/2017/05/15/the-oil-outlook-turns-bearish/#63ac9e9d7248

Russia looks ready to play ball and cut production; in the short term oil prices have already jumped in anticipation. But that may not hold going into 2018, at all. And note that it's not just the price per barrel that's killing the OPEC nations, it's the actual decrease in barrels sold, versus the corresponding increase in US companies.

Quote

robeiae
Thaumaturge

On a down bound train

Posts: 6,692

OPEC: is the writing on the wall? Jun 2, 2017 10:24:31 GMT -5

Post by robeiae on Jun 2, 2017 10:24:31 GMT -5

www.bloomberg.com/news/articles/2017-06-02/wall-street-has-more-bad-news-for-opec-2018-doesn-t-look-great

As oil prices sag despite OPEC’s renewed efforts to shore up world crude markets, Wall Street banks have more bad news for the producer group: the outlook for next year isn’t great either.

Oil futures have lost 8 percent since the Organization of Petroleum Exporting Countries and its allies agreed on May 25 to keep output constrained through the first quarter of 2018 in a bid to clear a global glut. While Goldman Sachs Group Inc. expects their strategy to ultimately succeed, they warn the surplus may re-appear once the curbs end. Morgan Stanley and JPMorgan Chase & Co. say the group will have little choice but to stick with the cuts even longer...

Even if OPEC extends their output accord for all of next year, it may only succeed in stopping further stockpile increases, he said.

“OPEC may be shackled to its deal for a long time,” said Martin.

This is big money--YUUUGE money--that is flying out the door for OPEC members and now Russia, that would keep flying out the door into the future.

Quote

poetinahat
Savant

Posts: 393

OPEC: is the writing on the wall? Jun 6, 2017 19:43:14 GMT -5

Post by poetinahat on Jun 6, 2017 19:43:14 GMT -5

May 11, 2017 9:13:43 GMT -5 robeiae said:

They're mostly asking the US to slow down, but there are zero signs that US producers are listening. In fact, exactly the opposite is likely to happen, as the oil-friendly Trump admin is actively looking for ways to help US producers.

And I'm sorry, but "the general prosperity of the world economy"

Ha. Ha. Ha. OPEC members don't give a shit about anyone else. They want their piles and piles of cash.

Yep, not a lot of sympathy there.

May 11, 2017 9:13:43 GMT -5 robeiae said:

There's a lot of crap and stupidity coming from Trump an company, but imagine what it might mean if he could break OPEC's back. Me, I'd stand up and cheer.

Watcha think?

Sure. Unless that leads to them running to Russia's open arms (so to speak).

Or to Middle Eastern gifts to various tentacles of the Trump empire. I have a hard time believing that anything Trump does, as president or otherwise, is for the benefit of anyone but himself.

Quote

robeiae
Thaumaturge

On a down bound train

Posts: 6,692

OPEC: is the writing on the wall? Jun 18, 2017 8:23:33 GMT -5

Post by robeiae on Jun 18, 2017 8:23:33 GMT -5

www.bloomberg.com/news/articles/2017-06-16/the-forward-curve-for-oil-prices-suddenly-looks-awful-for-opec

As if a mini-collapse in oil prices wasn’t bad enough for OPEC, the pattern in which futures contracts are trading years from now has flipped into the worst possible structure for the exporter group...

“It’s not good news for OPEC,” said Warren Patterson, commodity strategist at ING Bank NV. “Nothing this week has been particularly bullish. Non-OPEC supply is going to be stronger than demand growth, suggesting OPEC are possibly going to have to make even more cuts or extend them"...

“There were all those expectations that inventories would go down and that would lead to a tighter market this year and in following years,” Olivier Jakob, managing director of consultancy Petromatrix GmbH, said by phone. “Right now it has been delayed and the expectations of a re-balancing are starting to evaporate.”

Do I seem like I'm harping on this? Maybe I'm misreading things, but what I see going forward are OPEC nations with largely depleted bank accounts, with yearly revenues from oil dropping precipitously.

Last Edit: Jun 18, 2017 8:23:51 GMT -5 by robeiae

Quote

robeiae
Thaumaturge

On a down bound train

Posts: 6,692

OPEC: is the writing on the wall? Jul 13, 2017 11:20:56 GMT -5

Post by robeiae on Jul 13, 2017 11:20:56 GMT -5

money.cnn.com/2017/07/13/investing/opec-iea-production-oil-prices/index.html

Only a handful of OPEC countries are in full compliance with the cartel's agreement to limit crude production, according to the International Energy Agency.

Overall compliance with the deal slumped to 78% in June, from 95% in May. It's the lowest level since the agreement came into force in January.

So, what's going on is this:

OPEC instituted a production limit that all of it's member nations--and some non-member nations like Russia--agreed to follow. The hope was that this would drive oil prices back up. That hasn't happened. Prices had recovered slightly, thanks to increased demand, but that increase is mostly pushing US and other non-OPEC producers to increase production over the long term, even as they sell off current supplies in the short. Thus, OPEC nations are--imo--getting a little nervous, with some going so far as to ignore the agreement because they literally need the cash and don't want to risk another drop in the price of crude. And that, of course, is a drag on the price.

This is all really bad news for the Suadis, who are sticking to the agreement they initiated, because they'll get hammered if prices stay flat or even drop, especially if demand increases, because there's still the issue of inflation. And I think it adds another wrinkle to the Venezuela situation, as well.

And then there's the growth of electric vehicles on top of all of this, which could really push prices down in the future.

Remember when Peak Oil was a big deal? We may hit peak oil demand long before we it peak oil (which would be a great thing, imo). Ad if we do, it will leave OPEC holding the bag. Live by the sword...

Quote

robeiae
Thaumaturge

On a down bound train

Posts: 6,692

OPEC: is the writing on the wall? Apr 5, 2018 8:17:00 GMT -5

Post by robeiae on Apr 5, 2018 8:17:00 GMT -5

Some updates:

www.reuters.com/article/us-oil-opec-survey/opec-march-oil-output-sinks-to-11-month-low-reuters-survey-idUSKCN1HB1VM

OPEC oil output fell in March to an 11-month low due to declining Angolan exports, Libyan outages and a further slide in Venezuelan output, a Reuters survey found, sending compliance with a supply-cutting deal to another record.

www.cnbc.com/2018/04/03/saudi-arabia-and-irans-intensifying-feud-could-soon-end-opec-led-supply-cuts-strategist-says.html

Elevated geopolitical tension between Saudi Arabia and Iran could soon threaten the unity of an OPEC-led pact to keep oil prices in check, according to one commodity strategist.

"Saudi Arabia-Iran tensions appear to be intensifying. While this provides a geopolitical premium in oil for now, it could develop cracks in OPEC's unity, which could end the pact prematurely," Nitesh Shah, commodities strategist at ETF Securities, said in a research note Tuesday.

Saudi Arabia and Russia have led an ongoing effort by OPEC and other allied oil producers outside the cartel to try to clear a global supply overhang. The output cuts, expected to remain in place until at least the end of 2018, have helped to lift crude prices over the past 12 months.

And just for point of info, crude prices by year: www.statista.com/statistics/262858/change-in-opec-crude-oil-prices-since-1960/

Last Edit: Apr 5, 2018 8:17:18 GMT -5 by robeiae

Quote