OPEC will not cut production
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Very interesting article.
I found a sentence very telling.
Oil from unconventional sources are in part responsible for the lower demand.
I like gas to liquid even more now. Because so much less crude is going to lubricant feedstocks it's having an effect on oil prices,making them go down.
And the Russians need 100 bucks a barrel to balance their books.
Awesome. In theory.
I found a sentence very telling.
Oil from unconventional sources are in part responsible for the lower demand.
I like gas to liquid even more now. Because so much less crude is going to lubricant feedstocks it's having an effect on oil prices,making them go down.
And the Russians need 100 bucks a barrel to balance their books.
Awesome. In theory.
Originally Posted By: Drew99GT
http://www.businessinsider.com/opec-announcement-preview-2014-11
The oil war is on.
This is speculation, the meeting is not until tomorrow. Also, what is said in public and what really happens are totally differnt
http://www.businessinsider.com/opec-announcement-preview-2014-11
The oil war is on.
This is speculation, the meeting is not until tomorrow. Also, what is said in public and what really happens are totally differnt
True, it is speculation, but there are many other articles hinting at the same.
http://www.telegraph.co.uk/finance/oilpr...ep-pumping.html
" Oil slumped on Wednesday as expectations that Opec will cut production faded following dovish remarks by cartel kingpin Saudi Arabia, which could signal the beginning of a price war.
Speaking on the sidelines ahead of Thursday's critical meeting of the Organisation of Petroleum Exporting Countries (Opec) in Vienna, Saudi oil minister Ali Al-Naimi said: "The market will stabilise itself eventually".
His remarks were interpreted by the market as a signal that the cartel would keep its production ceiling at 30m barrels per day (bpd), which sent the price of crude lower."
http://www.telegraph.co.uk/finance/oilpr...ep-pumping.html
" Oil slumped on Wednesday as expectations that Opec will cut production faded following dovish remarks by cartel kingpin Saudi Arabia, which could signal the beginning of a price war.
Speaking on the sidelines ahead of Thursday's critical meeting of the Organisation of Petroleum Exporting Countries (Opec) in Vienna, Saudi oil minister Ali Al-Naimi said: "The market will stabilise itself eventually".
His remarks were interpreted by the market as a signal that the cartel would keep its production ceiling at 30m barrels per day (bpd), which sent the price of crude lower."
Seadrill's share crashed already, but it's interesting to see what happens to shale companies with strongly negative free cash flow. Like Continental Resources for example, most of the shale companies seem to be drilling money to the ground and never getting it back.
I've found one deviation though, EOG Resources. It can generate positive FCF.
I've found one deviation though, EOG Resources. It can generate positive FCF.
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oil futures will keep dropping, methinks. due to increased production of fracking gas in N.A., etc.
The "guessers" are now betting down on OPEC to cut their daily oil production (output) so as to raise the futures pricing again, but alas: no such news from OPEC announcement today...
So, watch as the oil futures pricing slip this winter, unless there's some major environmental catastropy such as major winter storms in certain parts of the world (drives energy demand up), etc.
It will go down to around 55USD methinks, and stay there for a short while before it gets up to 70bux again due to OPEC revision.
regardless, russian president's budget forecast of oil staying @ 100bux is gonna be a tough sell, very tough sell..
Q.
The "guessers" are now betting down on OPEC to cut their daily oil production (output) so as to raise the futures pricing again, but alas: no such news from OPEC announcement today...
So, watch as the oil futures pricing slip this winter, unless there's some major environmental catastropy such as major winter storms in certain parts of the world (drives energy demand up), etc.
It will go down to around 55USD methinks, and stay there for a short while before it gets up to 70bux again due to OPEC revision.
regardless, russian president's budget forecast of oil staying @ 100bux is gonna be a tough sell, very tough sell..
Q.
If the cost at the pump is going to drop too much the government can raise the tax. After all if you're using gasoline you must have a job or own a business and therefore you can pay more in taxes. That's the way the government shares your wealth. And with amnesty coming working people will have a lot more sharing to do. After all, those unfortunate people that will not work need your help. This drilling in North America has to be punished somehow or other.
Right.
OPEC is no more and no less than a creature of Saudi Arabia.
The Saudis enjoy large marginal production capacity as well as very low production costs.
If they decide that production won't be reduced to bolster the price, then it won't be.
What can those producers who have banked on higher prices do?
Produce less and see even lower revenues?
Too bad for such friends of our country as Russia and Venezuela.
Too bad for them that they haven't observed the history of OPEC.
This is nothing new.
OPEC is no more and no less than a creature of Saudi Arabia.
The Saudis enjoy large marginal production capacity as well as very low production costs.
If they decide that production won't be reduced to bolster the price, then it won't be.
What can those producers who have banked on higher prices do?
Produce less and see even lower revenues?
Too bad for such friends of our country as Russia and Venezuela.
Too bad for them that they haven't observed the history of OPEC.
This is nothing new.
Originally Posted By: JerryBob
The drop in crude means that airfares are going to drop, right?
I was hoping motor oil would start dropping in price too.
The drop in crude means that airfares are going to drop, right?
I was hoping motor oil would start dropping in price too.
As long as planes remain full, the cost of a ticket isn't going to drop.
Fuel is but one part of the operating costs of an airline and the least efficient airliners are making their final flights to the desert as quickly as Boeing, Airbus, Canadair and Embraer can build replacements.
Fuel is but one part of the operating costs of an airline and the least efficient airliners are making their final flights to the desert as quickly as Boeing, Airbus, Canadair and Embraer can build replacements.
Saudis are playing the long game. They can weather a medium to long-ish reduction in the price of oil. I've heard that unconventional oil isn't profitable much under a certain dollar figure. If they can hold out long enough to bankrupt the Russians, Iranians, and N. American unconventional oil producers, they win since they can then slash production and send oil back to whatever price they want. Meanwhile all the folks they drove out won't be able to start up production again since they went kaputt. Could work if they manage to hold their own house together long enough.
Originally Posted By: fdcg27
As long as planes remain full, the cost of a ticket isn't going to drop.
Fuel is but one part of the operating costs of an airline and the least efficient airliners are making their final flights to the desert as quickly as Boeing, Airbus, Canadair and Embraer can build replacements.
Interestingly, and only very slightly off topic, the lead singer of Iron Maiden is building a business taking stranded assets such as those, and refinancing/branding them into expanding Asian markets with maintenance plans that allow them to be returned to the mainstream if and when they come back.
IMO, the oil price is a shakedown to try to get as many new players out of the market, and their mining/extraction leases available from receivers as possible.
As long as planes remain full, the cost of a ticket isn't going to drop.
Fuel is but one part of the operating costs of an airline and the least efficient airliners are making their final flights to the desert as quickly as Boeing, Airbus, Canadair and Embraer can build replacements.
Interestingly, and only very slightly off topic, the lead singer of Iron Maiden is building a business taking stranded assets such as those, and refinancing/branding them into expanding Asian markets with maintenance plans that allow them to be returned to the mainstream if and when they come back.
IMO, the oil price is a shakedown to try to get as many new players out of the market, and their mining/extraction leases available from receivers as possible.
Originally Posted By: Shannow
IMO, the oil price is a shakedown to try to get as many new players out of the market, and their mining/extraction leases available from receivers as possible.
I share that view. Many shale and ultra deep water producers are quickly kicked out of business, and price of oil will behave accordingly in 1-2 years..
IMO, the oil price is a shakedown to try to get as many new players out of the market, and their mining/extraction leases available from receivers as possible.
I share that view. Many shale and ultra deep water producers are quickly kicked out of business, and price of oil will behave accordingly in 1-2 years..
Originally Posted By: sciphi
Saudis are playing the long game. They can weather a medium to long-ish reduction in the price of oil. I've heard that unconventional oil isn't profitable much under a certain dollar figure. If they can hold out long enough to bankrupt the Russians, Iranians, and N. American unconventional oil producers, they win since they can then slash production and send oil back to whatever price they want. Meanwhile all the folks they drove out won't be able to start up production again since they went kaputt. Could work if they manage to hold their own house together long enough.
A prolonged period of prices below eighty dollars or so will slaughter enhanced recovery producers, many American producers among them. Fracking for natural gas production will continue, but fracking to produce liquid product will get killed.
Can production be restarted at some later date?
Sure, somebody will buy and sit on those assets awaiting the day when sustained higher price levels make it profitable again.
This will be true everywhere.
Saudis are playing the long game. They can weather a medium to long-ish reduction in the price of oil. I've heard that unconventional oil isn't profitable much under a certain dollar figure. If they can hold out long enough to bankrupt the Russians, Iranians, and N. American unconventional oil producers, they win since they can then slash production and send oil back to whatever price they want. Meanwhile all the folks they drove out won't be able to start up production again since they went kaputt. Could work if they manage to hold their own house together long enough.
A prolonged period of prices below eighty dollars or so will slaughter enhanced recovery producers, many American producers among them. Fracking for natural gas production will continue, but fracking to produce liquid product will get killed.
Can production be restarted at some later date?
Sure, somebody will buy and sit on those assets awaiting the day when sustained higher price levels make it profitable again.
This will be true everywhere.
Crude futures are below $70, down 6% as I type. What's fascinating, like someone else pointed out, is that Russia isn't fighting this move. They want to kick American shale in the nutz just like OPEC does.
I just read that a lot of US shale producers sold their output in long dated futures when prices were in the 90s/100s; when those contracts expire and they're forced to sell at spot or current futures prices, they'll go bankrupt as oil prices below $70-$80 depending on specific operations, isn't profitable.
I just read that a lot of US shale producers sold their output in long dated futures when prices were in the 90s/100s; when those contracts expire and they're forced to sell at spot or current futures prices, they'll go bankrupt as oil prices below $70-$80 depending on specific operations, isn't profitable.
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http://online.wsj.com/articles/fracking-firms-get-tested-by-oils-price-drop-1412899027
"Weakening oil prices could put a crimp in the U.S. energy boom. At $90 a barrel and below, many hydraulic-fracturing projects start to become uneconomic, according to a recent report by Goldman Sachs Group Inc. While fracking costs run the gamut, producers often break even around $80 to $85."
"Weakening oil prices could put a crimp in the U.S. energy boom. At $90 a barrel and below, many hydraulic-fracturing projects start to become uneconomic, according to a recent report by Goldman Sachs Group Inc. While fracking costs run the gamut, producers often break even around $80 to $85."
Originally Posted By: Drew99GT
Crude futures are below $70, down 6% as I type. What's fascinating, like someone else pointed out, is that Russia isn't fighting this move. They want to kick American shale in the nutz just like OPEC does.
Actually, watching the international news just then, Russia are complaining that the move is kicking their economy as well.
Bloke with a microphone was explaining that if they don't have the relatively warm (from being underground) oil flowing, many of the wells will freeze, and have to be redrilled...they have to keep a lot of them pumping...and they can't store the quantities above ground, so they have to sell it.
Crude futures are below $70, down 6% as I type. What's fascinating, like someone else pointed out, is that Russia isn't fighting this move. They want to kick American shale in the nutz just like OPEC does.
Actually, watching the international news just then, Russia are complaining that the move is kicking their economy as well.
Bloke with a microphone was explaining that if they don't have the relatively warm (from being underground) oil flowing, many of the wells will freeze, and have to be redrilled...they have to keep a lot of them pumping...and they can't store the quantities above ground, so they have to sell it.
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