AuthorTopic: Oil Price Crash: Who Cooda Node?  (Read 138381 times)

Offline RE

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Cooking The Books? Saudi Aramco Could Be Overvalued By 500%
« Reply #720 on: March 01, 2017, 02:15:00 AM »
Wanna buy an Oil Company cheap?

RE

http://oilprice.com/Energy/Energy-General/Cooking-The-Books-Saudi-Aramco-Could-Be-Overvalued-By-500.html

Cooking The Books? Saudi Aramco Could Be Overvalued By 500%
By Gregory Brew - Feb 27, 2017, 4:01 PM CST Al Falih


The world’s most valuable oil company, Saudi Aramco, is approaching its first IPO in 2018, as the government of Saudi Arabia prepares to sell off portions of the company in order fill a sovereign wealth fund crucial to the country’s transition away from an oil-based economy.

Saudi Aramco is worth $2 trillion, according to Riyadh, and its five percent initial offering could yield $200 billion. This would be the largest IPO in history, blowing away the offering of China’s Alibaba in 2014.

The problem, however, is that the company itself may not be worth as much as the Saudi government claims. Recent reports and growing skepticism regarding Aramco’s actual worth have cast some doubts on whether the world’s largest IPO will be as earth-shattering as originally thought.

The original estimate offered by Saudi Arabia, which placed Saudi Aramco’s worth at around $2 trillion, was based on a valuation of Saudi Arabia’s oil proven reserves, 261 billion barrels. Multiplying at $8 per barrel, those reserves alone are worth $2.088 trillion. When Saudi Crown Prince Mohammed bin Salman made that original estimate, it garnered some skepticism: how could any company be worth such an astronomic sum?

Now, analysts at Wood Mackenzie have conducted their own study of Saudi Aramco, and came up with a completely different (and much lower) figure. WoodMac puts Aramco’s true value closer to $400 billion, eighty percent less than the Saudi estimate, and it arrived at the figure by considering future demand and the anticipated average price of oil (on which profits will depend), as well as Saudi Aramco’s status as a state-run company.

WoodMac doesn’t dispute the figure of 261 billion barrels lying under Saudi Arabia and just offshore; that figure has been confirmed by independent sources. Where things get complicated, though, is in the management and taxation of Saudi Aramco, which does not release financial statements. It is known that the company, which is the bedrock of the Saudi economy and the major foundation for state finances, pays a twenty percent royalty on revenues and an 85 percent income tax, supporting the Saudi government and providing a living for the 15,000 members of the Saudi royal family. Tax commitments of that size could have a major impact on the company’s profitability, leaving little in dividends, a factor WoodMac considered in its valuation.

There’s also the question of investors demanding discounts for investing in state companies. Bloomberg noted that Saudi Arabia, while a comparatively stable Middle Eastern nation, could encounter the kinds of problems and instabilities plaguing other resource-rich countries with large, state-run energy companies. There are questions surrounding the viability of the country’s long-term economic plan, Vision 2030, which anticipates a major shift in the Saudi economic outlook away from oil and gas and towards greater diversity.

Bloomberg also noted that the Saudi tactic of computing the company’s price according to its held proven reserves doesn’t add up: Russia’s Rosneft, by that accounting, should be worth $272 billion instead of its current value of $64 billion, while the value of ExxonMobil, the world’s most valuable private energy firm, would be fifty-three percent less.

Other commentators who spoke to Bloomberg off the record put the company’s true value somewhere between $500 billion and $1 trillion.

WoodMac has predicted prices in 2017 to remain relatively stable, if OPEC continues to abide by its production agreement, and believes the average price will be as high as $57 per barrel. But looking further ahead, the firm (and other forecasters) are uncertain how electric cars, climate change, technological improvements and changes in demand will affect prices.

This uncertainty also affects the estimates surrounding Aramco’s real worth. Massive Saudi reserves are large enough to sustain current production for another 73 years, so the forecast looks good. But while Riyadh expects peak crude oil demand to come in 2035, other forecasters are much more pessimistic: OPEC has indicated that peak demand could come in as little as a decade, while others are hinting it could come even earlier.

A major facet of the Vision 2030 plan is the surety of future world oil demand: the Saudis must hope that Saudi crude remains attractive and competitive, even as it moves its economy away from relying solely on Aramco’s business. And even if the country sells off its state-run company, Saudi interest and investment will remain closely tied to world oil, as the recent decision to invest $7 billion in an oil processing plant in Malaysia makes plain.

So, even if Saudi Arabia succeeds in selling off Saudi Aramco, perhaps for $2 trillion or perhaps for much, much less, it’s economy and the well-being of its royal family will depend on the world’s demand for oil and gas.

By Gregory Brew for Oilprice.com
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Offline RE

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Oil Falls as Record U.S. Crude Supplies Offset OPEC Output Cuts
« Reply #721 on: March 02, 2017, 03:21:39 AM »
MOAR GLUT!

Demand will rebound, traders are sure...

This is the best chart yet to demonstrate Collapse of the Oil Economy is in Full Swing now.  This is 35 years of records.  In the course of a couple of years, Inventories have DOUBLED!  Why?  It's the DEMAND, Stupid!  The customers can't afford it at the price you are selling it at!

BUT, they refuse to drop the price.  Why?  Because they are ALREADY losing money at the current price.

They are going to run out of places to store this stuff if they don't do a Liquidation Sale soon.  FINAL SALE!  EVERYTHING MUST GO!  90% OFF!


RE

https://www.bloombergquint.com/markets/2017/03/01/oil-falls-as-record-u-s-crude-supplies-offset-opec-output-cuts

Oil Falls as Record U.S. Crude Supplies Offset OPEC Output Cuts


Mark Shenk
March 1, 2017, 7:21 pm
March 1, 2017, 11:49 am

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(Bloomberg) -- Oil dropped after government data showed that U.S. crude stockpiles rose to a record, offsetting OPEC’s efforts to drain a global glut.

Crude supplies climbed 1.5 million barrels to 520.2 million barrels, the highest in weekly data going back to 1982. A 3 million-barrel supplies gain was projected by analysts surveyed by Bloomberg before the Energy Information Administration report. Compliance among the 10 OPEC members that pledged to cut production rose to 89 percent, while gains from other members meant total output rose slightly, consultant JBC Energy said.

As the Organization of Petroleum Exporting Countries and 11 non-member nations work to reduce supply to end a three-year glut, U.S. producers are ramping up, sowing speculation they may fill the gap. That has so far subdued price swings, sending the Chicago Board Options Exchange Crude Oil Volatility Index on Monday to the lowest since October 2014.

"The market’s still in a struggle between OPEC cuts and the reality that there’s a lot of oil in storage here," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone. "We need to start seeing supply declines here pretty soon or the market will be in trouble."

West Texas Intermediate for April delivery slipped 18 cents, or 0.3 percent, to close at $53.83 a barrel on the New York Mercantile Exchange. Futures bounced between $51.22 and $54.94 in February, the tightest range since August 2003.

Brent for May settlement declined 15 cents, or 0.3 percent, to $56.36 a barrel on the London-based ICE Futures Europe exchange. The April contract dropped 0.6 percent to expire at $55.59 on Tuesday. The global benchmark closed at a $2.08 premium to May WTI.
Refinery Demand

Refineries boosted the amount of crude they processed for the first time in seven weeks. Refiners typically plan maintenance programs for low-demand periods such as February when there’s a lull between winter preparations and the summer surge of gasoline consumption.

"It’s good to see the build was a little lighter than expected," Brian Kessens, a managing director and portfolio manager at Tortoise Capital Advisors LLC in Leawood, Kansas, who helps manage $17.1 billion in energy assets, said by telephone. "Refinery utilization picked up a little bit, which might explain the smaller-than-expected gain."

Gasoline stockpiles fell 546,000 barrels, while inventories of distillate fuel, a category that includes diesel and heating oil, slipped 925,000 barrels.
Oil-market news:

    Exxon Mobil Corp. plans to boost U.S. shale oil output by 20 percent annually for most of the next decade as new Chief Executive Officer Darren Woods intensifies the company’s American focus.
    Eni SpA reported fourth-quarter profit that was more than double analysts’ estimates on a combination of rising oil prices, lower costs and higher-than-expected production.
    Kazakhstan may have pumped oil at a record rate of 1.79 million barrels a day last month, according to government data compiled by Bloomberg.

« Last Edit: March 02, 2017, 03:33:49 AM by RE »
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Offline RE

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Oil Has Room To Fall As Speculators Bail On Bullish Bets
« Reply #722 on: March 21, 2017, 03:59:13 AM »
http://oilprice.com/Energy/Oil-Prices/Oil-Has-Room-To-Fall-As-Speculators-Bail-On-Bullish-Bets.html

Oil Has Room To Fall As Speculators Bail On Bullish Bets
By Nick Cunningham - Mar 20, 2017, 3:44 PM CDT


Last week, after WTI dipped to $48, it seemed to firm up a bit on assurances from OPEC regarding compliance with its cuts, and a better-than-expected report from the EIA showing a slight drawdown in crude oil inventories also provided a boost to oil prices. Crude closed out the week slightly up from the week before.

But the downside risk to oil prices has not gone away. In fact, with market sentiment starting to falter, a growing number of investors are abandoning their record bullish bets on oil, which could send prices down further.

The threat of a possible liquidation of net-long positions had grown in recent weeks and months, as investors piled into a one-sided bet even though oil market fundamentals were murky at best. As January gave way to February and March, and the bullish bets continued to mount, so did U.S. oil production. The optimism became increasingly hard to justify and the downside risk to prices grew more obvious. This kind of lop-sided positioning tends to correct itself when sentiment becomes too detached from the fundamentals – the only question was when that would happen.

Well, it appears to be happening now.

New data shows that hedge funds and other money managers cut their long bets and increased shorts, resulting in the sharpest net-long reduction on record for a single week. "Speculative investors have thrown in the towel it seems. We've got record selling in the week ending March 14 and the bleeding has not stopped yet," Carsten Fritsch, senior commodities analyst at Commerzbank, told Reuters. "The continued increase in U.S. oil rigs adds to the bearish sentiment." Baker Hughes reported another strong increase in the rig count last week, with 14 oil rigs added back into the field. At 631, the oil rig count is now at an 18-month high.
Related: Expert Analysis: The OPEC Cuts May Be Working

For the week ending on March 14, hedge funds slashed their net-long positions by a staggering 23 percent, a record decline. That corresponded with a roughly 10 percent fall in oil prices.

"It’s sort of a negative feedback loop, where money managers were selling because the price was falling, and the price was falling in part because money managers were selling,” Tim Evans, an analyst at Citi Futures Perspective in New York, said in a Bloomberg interview.

U.S. oil production also rose in the latest EIA report, with output now above 9.1 million barrels per day and rising.

Moreover, the market could be exposed to yet another source of rising supply in the near future.

Libya had provided one of the very few sources of bullishness to the market in recent weeks, with violence knocking about 100,000 bpd offline, taking production down to 600,000 bpd. Libya’s National Oil Corporation had lost control of its largest oil export terminals Es Sider and Ras Lanuf, and the cutback in exports surprised the market. Libya had previously announced plans to dramatically ramp up production and exports this year, so the unexpected loss of output provided a lift to crude prices.
Related: OPEC Favors Production Cut Extensions As Next Meeting Nears

But the disruptions might be temporary. Libya’s NOC says it will regain control of the ports and restore output. Exports could restart within 10 days, a board member of the NOC told Bloomberg. More Libyan supply will weigh on the market.

Of course, that will be small potatoes compared to what OPEC decides to do with its deal, which runs through June. Saudi Arabia has sent mixed signals over what it wants and expects, alternating between voicing frustration with laggards not complying and warning the shale industry on the one hand, and voicing optimism about compliance and sending soothing signals to the market regarding an extension on the other.

Expectations over an OPEC extension are all over the map, so there is no use at this point in speculating what might happen. Goldman Sachs’ default assumption is no extension. At the other end of the spectrum is Deutsche Bank AG, which predicts not only an extension through the end of 2017, but even an extension through the end of 2018. In between are plenty of more nuanced positions, so take your pick.

In the short run, however, oil markets are in danger of sliding. Investors are bailing out of their positions at a rapid pace, which threatens to drag oil down. Unless some positive news emerges in the next few days or weeks, WTI and Brent could lose a few more dollars.

At the same time, the liquidation of the unsustainable build up in net-long positions takes away some of the harshness of the downside risk. Sort of like a safety valve that has relieved some pressure, the reduction in bullish bets means that there will be less of a danger of another sharp correction in prices stemming from speculative moves. Short sellers are using up their firepower right now.

In other words, the mid-$50s appeared to be a stable range for the past few months, but if the market is to trade narrowly and steadily again, a more appropriate range given today’s fundamental could arguably be the upper-$40s.

By Nick Cunningham of Oilprice.com
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Offline roamer

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Re: Oil Price Crash: Who Cooda Node?
« Reply #723 on: March 21, 2017, 10:08:38 AM »
Yeah I'm betting on a price crash, unless something expected comes out of the ME or maybe KSA finally cuts hard.  Beginning to have serious doubts about the validity of my idea that having another decade of reasonably priced oil would help us transition.  No sign of orderly transition in sight anywhere even with ample resources the system is internally FUBAR.  I am back in doomer light to possible doomer heavy camp.  Was a nice break from reality while it lasted...

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Re: Oil Price Crash: Who Cooda Node?
« Reply #724 on: March 21, 2017, 12:17:41 PM »
I am back in doomer light to possible doomer heavy camp.  Was a nice break from reality while it lasted...

:hi: back.  :icon_sunny:

<a href="http://www.youtube.com/v/xZzEzDkeHzI" target="_blank" class="new_win">http://www.youtube.com/v/xZzEzDkeHzI</a>

RE
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OPEC Be Warned: Russia Battens Down the Hatches for Oil at $40
« Reply #725 on: March 24, 2017, 08:01:01 PM »
How well will the Battened Down Hatches on the Ruskie Oil Submarine hold up at $20/bbl? ???  :icon_scratch:

RE

https://www.bloomberg.com/news/articles/2017-03-24/opec-be-warned-russia-battens-down-the-hatches-for-oil-at-40

OPEC Be Warned: Russia Battens Down the Hatches for Oil at $40


by Ksenia Galouchko
March 24, 2017, 8:34 AM AKDT March 24, 2017, 3:00 PM AKDT
Trump Says GOP Health Bill Was 'Very Close' to Passing
Analyst Sen Sees Oil Above $60 If OPEC Extends Deal

Oil Strategist Baruch Sees Market at $40 Within a Month

Perhaps the Bank of Russia knows something the world doesn’t.

As the Organization of Petroleum Exporting Countries and its allies prepare to meet for a review of their production cuts this weekend, the central bank of the world’s biggest energy exporter is hunkering down for years of oil near $40 a barrel.
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While analysts in a Bloomberg survey see the price of benchmark Brent crude -- which trades at a small premium to Russia’s Urals export blend -- rising 16 percent from current levels by the end of the year, oil’s 10 percent decline in March alone amid supply woes is making the market nervous. Russia, a key partner in the deal and a participant in the talks in Kuwait, might only add to those jitters.

“The Finance Ministry, the cabinet and the central bank are leaning on the cautious side in terms of their expectations regarding growth, driven still to a large degree by oil,” said Piotr Matys, an emerging-market currency strategist at Rabobank in London. “It’s better to be conservative and to be surprised on the upside than too optimistic and end up disappointed.”

Policy makers in Moscow said on Friday they see Urals at an average of $50 a barrel this year, but falling to $40 at end-2017 and then staying near that level in 2018-2019. As the central bank honed its forecasts, it also gingerly resumed monetary easing, pointing to the “uncertainty” in the oil market as a factor for its “conservative” forecasts.

Russia’s Finance Ministry similarly highlighted the $40 level in January when it announced that the central bank will start buying foreign currency on its behalf when crude exceeds that level in order to insulate the exchange rate from oil volatility. The price of $40 is additionally being used to calculate the country’s budget in 2017-2019.
‘Upside Surprises’

Even as oil has recovered, Russia’s tendency to stick with the more conservative scenario is “positive” as it “leaves room for upside surprises,” according to Viktor Szabo, a bond fund manager at Aberdeen Asset Management Plc.

Forecasting oil is no game for the Bank of Russia. Its 65 percent plunge in 2014 and 2015 battered the nation’s currency, forced an emergency rate increase in the middle of the night and pushed Russia into recession. The share of oil and gas revenue was at 36 percent of budget income in 2016.

Even as the historic OPEC supply-cut deal helped halt oil’s collapse, pushing it up to $55 a barrel and setting the stage for Russia’s economic recovery, the central bank is taking nothing for granted.

The correlation between the ruble and oil has declined this year, falling to the lowest since August 2015, according to data compiled by Bloomberg. As crude slid below $50 a barrel this week, the Russian currency barely budged, weakening less than 1 percent, because its carry-trade appeal largely offset the dimming outlook for energy.

While OPEC won’t formally decide until May whether to prolong the deal, which lasts through June, officials will meet this weekend in Kuwait to discuss its progress. Oil will tumble to $40 if OPEC doesn’t extend its agreement later this year, one of the most prominent producers in the U.S. shale patch said this month.

“Once (actually more than once) bitten, twice shy,” said Elina Ribakova, an economist at Deutsche Bank AG in London. “The central bank and the Finance Ministry are sticking to the conservative $40 oil scenario because they want to be ready for and protect themselves against the worst-case scenario.”
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Offline RE

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https://www.forbes.com/sites/timworstall/2017/03/26/oil-output-cuts-wont-work-economic-change-means-opec-has-lost-control-of-the-price/#4efb49725a55

Oil Output Cuts Won't Work - Economic Change Means Opec Has Lost Control Of The Price

Tim Worstall , 

Contributor

I have opinions about economics, finance and public policy.

Opinions expressed by Forbes Contributors are their own.

The point and purpose of running a cartel is, of course, to raise the price at which you can sell your product. Or if you're trying to be a monopsonist, lower the price you have to pay as those Silicon Valley firms did with their collusion. The trick in a cartel is to be able to control enough of either production or consumption so as to be able to control the price. Given the millions who can do economic scribbling there's no point at all in my trying to limit output so as to increase income. But for some decades now Opec has been able to control, just about well enough, sufficient of oil production to be able to drive the price. That time is now well and truly over. And what's happened is the thing which kills every cartel and monopoly in the end--technological change.

    A joint committee of ministers from OPEC and non-OPEC oil producers has agreed to review whether a global pact to limit supplies should be extended by six months, it said in a statement on Sunday.

    An earlier draft of the statement said the committee "reports high level of conformity and recommends six-month extension".

It's not going to work. The Opec members just don't control enough of the market any more:

    The Organization of the Petroleum Exporting Countries and 11 other leading oil producers including Russia agreed in December to cut their combined output by almost 1.8 million barrels per day in the first half of the year.

There's a small price range where they can have modest control. But above that range they just no longer have the economic heft necessary:

    Many experts are saying OPEC is losing control of its ability to dictate oil prices, particularly in North America, as shale-oil production has become price-competitive with conventional oil.

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That's entirely correct and this is a way of putting it that I hadn't heard before:

    Kloza said OPEC may be losing its hold because of what he terms "the 7-and-7 cocktail."

    The first seven stands for the seven-year lead time for production by the owners of conventional wells in the Mideast.

    The second is the seven-month lead time for shale-oil production in places like the Great Plains of the U.S.

There will always be people who try to challenge a cartel. And the correct reaction is that when they do cartel members flood the market to bankrupt those contenders. The super-profits to be made from the cartel make up for those short term losses. Until, as here, the technology changes. Shale is now profitable at prices under $50 a barrel. The price for a commodity is determined by the costs of marginal production--thus the oil price globally is going to be determined by the marginal costs of opening up a few more fracking wells.

Thus Opec can get prices up into the $40s by cutting production. But not a great deal further on anything but the most short term basis. Because that price going past $50 will lead to a massive fracking expansion.

There is an economic theory which says that this always happens, a monopoly or cartel is always brought down by changing technology. It's even a true theory too, although we need to think very long term for it to turn out for it to be true. And that's where Opec is now, technologically challenged. They have a little pricing power left but not enough to make it soar.
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The Real World of Oil Has a Warning for Financial Markets
« Reply #727 on: April 20, 2017, 10:43:59 AM »
https://www.bloomberg.com/news/articles/2017-04-20/brent-physical-oil-market-weakens-again-despite-opec-output-cuts

The Real World of Oil Has a Warning for Financial Markets
by Javier Blas
and Rupert Rowling
April 20, 2017, 6:26 AM AKDT April 20, 2017, 8:42 AM AKDT


    OPEC supply management yet to work as producer group intended
    Brent is benchmark for more than half the world’s crude oil

Oil Analyst Says OPEC Must Maintain the Cut
John Lipsky Says World Growth Has Been Too Slow

BofA’s Blanch Says Strong Dollar ‘Big Headwind’ for Oil

The Brent physical oil market is flashing signs of weakness again as dwindling Asian purchases, an influx of American crude to Europe, and supplies flowing out of storage all combine to recreate a glut in the North Sea.

The weakness comes at a time when speculators have started rebuilding bullish positions after a sell-off last month, betting the market will tighten in the second quarter. Yet, Brent physical oil traders say the opposite is happening so far, according to interviews with executives at several trading houses, who asked not to be identified discussing internal views.

“We need to see the market going really into deficit for oil prices to rise,” Giovanni Staunovo, commodity analyst at UBS Group AG in Zurich, said. “If this is temporary, it could be weathered, but it needs to be monitored.”

The weakness is particularly visible in so-called time-spreads -- the price difference between contracts for delivery at different periods. Reflecting a growing surplus that could force traders to seek tankers as temporary floating storage facilities, the Brent June-July spread this week fell to an unusually weak minus 55 cents per barrel, down from parity just two months earlier. The negative structure is known in the industry as contango.


"Keep a wary eye on the Brent contango," said Jan Stuart, energy economist at Credit Suisse Securities LLC in New York. "Bellwether Brent time-spreads have been counter-seasonally widening.”

In the world of contracts for difference, which allow traders to insure price exposure for their North Sea crude shipments week-by-week, the one-week CFD spread plunged this week to minus $1.84 a barrel, the weakest since late November and just before the Organization of Petroleum Exporting countries and allied nations announced their first joint effort to manage supply in over a decade. A month ago, the comparable CFD traded at just minus 50 cents barrel.

"It will not take much before we see headlines about floating storage starting to increase again," said Olivier Jakob, head of oil consultant PetroMatrix GmbH, in Zug, Switzerland.
Weaker differentials

The differentials between physical grades and benchmarks have also weakened in recent weeks. Glencore Plc, the world’s largest commodities trader, on Thursday bought from French oil giant Total SA a cargo of Brent crude at $1 a barrel below the main North Sea benchmark, the widest discount in 22 months, according to a trader monitoring deals.

Oil traders said OPEC was initially successful, driving oil prices higher and tightening time-spreads. But the group was a victim of its own success, as those same spreads forced crude out of storage, flooding an already weaker physical market with supply. Higher headline prices also boosted U.S. shale producers.

Among the factors behind the weakness, traders cited muted demand in Asia, saying Chinese independent refiners -- known as "teapots" -- have dramatically reduced buying after strong imports earlier this year.

How OPEC’s cuts have failed to eliminate the glut.
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Crude arrivals from the U.S. are also surging. American exports ran in early April at a four-week average of 706,000 barrels a day, up nearly 90 percent from the same time of last year, according to data from the U.S. Energy Information Administration.  In January and February, the nation’s exports to Europe climbed almost fivefold to 178,000 barrels a day, the most recent U.S. Census Bureau figures compiled by Bloomberg show.

Lastly, tighter time-spreads in late February and early March forced some crude out of storage, particularly from onshore tank-farms in the Caribbean and Saldanha Bay in South Africa, flooding the market, the traders said.

As the physical market for Brent weakens, Saudi Arabia said on Thursday that some oil producers have reached a tentative agreement to extend the current round of output cuts. Russia, which joined OPEC earlier this year in lowering production, said it was too early to say whether a roll-over will be needed.

“There is an initial agreement that we might be obligated to extend to get to our target," Khalid Al-Falih, the Saudi energy minister, told an oil conference in Abu Dhabi.

OPEC and several other producers including Russia, Mexico and Kazakhstan agreed in December to reduce production by about 1.8 million barrels a day -- the first OPEC and non-OPEC deal in more than a decade -- in an effort to counter an oversupply weighing on prices. The producer group meets again May 25.

"OPEC will need to take action at the next meeting in order to provide some kind of oil-price support," said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. in London.
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Offline agelbert

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Re: The Real World of Oil Has a Warning for Financial Markets
« Reply #728 on: April 20, 2017, 11:15:03 AM »
And then there is that pesky little problem called OIL DEMAND DESTRUCTION caused by the Renewable Energy Revolution.  :icon_mrgreen:

The fossil fuelers want oil prices to go up but that is kind of hard to do while Renewable Energy prices keep going DOWN.  :icon_sunny:

SNIPPET:

InsideClimate News April 17, 2017 | Rona Fried | Renewables & Efficiency

Thanks to continuing declines in solar and wind costs, the world added record amounts of renewable energy last year at the lowest prices ever , according to the United Nations.  55% of all new power came from renewables – one of the reasons emissions were flat in 2016 for the third year in a row.

Electricity from renewables rose 9% (139 gigawatts), while the cost to install all that dropped 23%.

Renewables now provide 11.3% of the world’s electricity, preventing 1.7 gigatons of carbon emissions a year.

“More for less” was the story of renewable energy in 2016. Global investment in renewables (excluding large hydro) fell by 23% to $241.6 billion, the lowest total since 2013, but there was record installation of renewable power capacity worldwide in 2016,” says the report.

Key Findings:

◾Investment in renewables was roughly double that of fossil fuels for the fifth consecutive year.

◾Costs to install solar PV, onshore wind and offshore wind were down 10%

◾Record investments in offshore wind, up 53% to $25.9 billion in Europe and China

◾Solar and wind prices reached record lows at power auctions – prices “that would have seemed inconceivably low only a few years ago.”


http://renewablerevolution.createaforum.com/renewables/the-big-picture-of-renewable-energy-growth/240/
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Re: Oil Price Crash: Who Cooda Node?
« Reply #729 on: May 05, 2017, 07:02:15 AM »
Oil Future falls under $44 /b

« Last Edit: May 05, 2017, 07:04:05 AM by Palloy2 »
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Re: Oil Price Crash: Who Cooda Node?
« Reply #730 on: May 05, 2017, 09:54:09 AM »
Oil Future falls under $44 /b

Oil does the Limbo.  How LOW can it GO?  :icon_sunny:

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Offline Palloy2

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Re: Oil Price Crash: Who Cooda Node?
« Reply #731 on: May 05, 2017, 05:43:20 PM »
A brilliant analysis of the situation by Gail here: https://ourfiniteworld.com/2017/05/05/why-we-should-be-concerned-about-low-oil-prices/

As usual it is in lecture format with too many slides to post here. 

Its essence is that we have modeled different sub-systems of the total system, and assumed the interactions between sub-systems work as usual in a post-Peak Oil scenario, but they don't, so the total system modeling is wrong.  Of necessity, the analysis is complex, and can't be summed up in one sentence.

Nevertheless, it goes something like this (my spin, not Gail's): 
The pressure to repay existing debt means US frackers continue to pump, leading to oversupply, leading to low prices, but they are not investing enough in more exploration, so down the track (4 years, counting from mid-2014 ?) supply will run low, prices will rise, making the gasoline unaffordable, leading to bankruptcies and worker layoffs, leading to more debt being necessary to keep things going, the interest on the bigger debt being a drag on every business, so less profitability, not more, leading to more Central Bank "assets" (as collateral for loans)...



If the money-printers refuse to let the system implode, but keep printing and bailing out everything that fails,  (and they will), eventually the Central Banks will own everything, including the Federal and State governments, other banks and all companies.  The End.

The (shorter and more likely) alternative is that it all gets too complicated, something fails and doesn't get bailed out in time, and the resulting crashes will cascade around the world.  The End.

In the latter scenario, the critical crash could happen at any moment.
"The State is a body of armed men."

Offline RE

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Re: Oil Price Crash: Who Cooda Node?
« Reply #732 on: May 05, 2017, 05:46:39 PM »
A brilliant analysis of the situation by Gail here: https://ourfiniteworld.com/2017/05/05/why-we-should-be-concerned-about-low-oil-prices/

I read this article last night. This is all derivative from what Steve showed years ago.  It's a total ripoff of his material without accreditation.

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Re: Oil Price Crash: Who Cooda Node?
« Reply #733 on: May 05, 2017, 06:00:56 PM »
If the money-printers refuse to let the system implode, but keep printing and bailing out everything that fails,  (and they will), eventually the Central Banks will own everything, including the Federal and State governments, other banks and all companies.  The End.

Indeed they will own it all.  But what is it they "own" here?  The assets are irredeemable debt.  The CBs themselves are then functionally bankrupt.

Quote
The (shorter and more likely) alternative is that it all gets too complicated, something fails and doesn't get bailed out in time, and the resulting crashes will cascade around the world.  The End.

In the latter scenario, the critical crash could happen at any moment.

Agreed this is a more likely scenario.  When Italy pulls a Puerto Rico, I find it hard to imagine how the Smartest Guys in the Room can credibly do a bailout of that one.  ::)

One just waits for the Sword of Damocles to fall.



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Re: Oil Price Crash: Who Cooda Node?
« Reply #734 on: May 05, 2017, 07:22:49 PM »
Quote
Indeed they will own it all.  But what is it they "own" here?  The assets are irredeemable debt.

They will own a controlling interest in the company, if not ALL of the shares.  They obviously can't sell it to anyone, but they can install a new board and have them run the company.  They will own all the buildings and become practicing landlords.  They can even rationalise different company holdings they own - mergers, acquisitions, asset-stripping, the usual corporate raider stuff.  What's the point? - well, they don't want the game to stop, do they.

We would then see how much inequality they are prepared to tolerate.  One could look to slums and sweat-shops in Pakistan to get a rough handle on that.  They also know that a hungry, unemployed, alienated population takes more expensive policing than a contented one, so would strike an optimum balance.  Plenty of free TV, cheap drugs, football - bread and circuses all round.
"The State is a body of armed men."

 

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