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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (22930)	10/11/2016 3:42:43 PM
From: Goose94	Read Replies (1) \| Respond to of 202704

Crude oil prices continued to add to the latest rally, with credit for the latest gains due to Russian President Vladimir Putin, who lent his support for OPEC’s production cut. Putin said on Monday that Russia “stands ready to join common efforts to limit production” and he also said that intervention from OPEC and Russia to reduce production is “the only way to save the stability of the energy sector.” The comments were enough to push oil prices up to one-year highs on Monday. Russia is the largest oil producer in the world at over 11 million barrels per day. Putin and OPEC all talk? The comments could once again be an attempt from a top oil producer to push up the prices through a bit of market psychology, only to be followed by some less-than-substantial actions on production levels. But recent history suggests that trying to manipulate the oil markets is indeed possible in the short-term. WTI and Brent are now trading comfortably above $50 per barrel. “I think we’re going to see the market react to a number of potentially competing headlines” over the next several weeks, said Andy Lipow, president of Lipow Oil Associates, according to The Wall Street Journal. Mark Waggoner of Excel Futures agreed. “We still have a glut. We still should have prices going lower,” he told the WSJ. “Everyone wants prices higher but nobody wants to cut. By jawboning the market higher, they don’t have to do anything.” IEA downgrades demand…again. In its October Oil Market Report, the IEA said that demand continues to soften, with a deceleration underway in China. The energy agency lowered its 2016 oil demand growth estimate to 1.2 million barrels per day, down from 1.3 mb/d in September and 1.4 mb/d in August. At the same time, the IEA said the world remains flush with oil, as OPEC has succeeded in ramping up production to record levels. “Left to its own devices”, the IEA says, the oil market “may remain in oversupply through the first half of next year. If OPEC sticks to its new target, the market’s rebalancing could come faster.” Higher OPEC production threatens Algiers deal. The IEA also said that OPEC’s rising production threatens to overwhelm the planned production cuts announced in Algeria last month. OPEC’s oil output rose by 160,000 barrels per day in September to an all-time high of 33.64 mb/d. Gains from Iraq, Libya, and Iran pushed production higher, while the Gulf States continued to pump at elevated levels. The problem with that is that OPEC would need to somehow find cuts on the order of at least 600,000 barrels per day just to reach the upper end of the range (32.5 mb/d to 33.0 mb/d) that it said it would lower output to. That may be difficult to pull off and would likely require Saudi Arabia to do almost all of the heavy lifting. Goldman Sachs agreed – in a note to clients the investment bank said that while the odds of a deal in November have become a “greater possibility,” the cuts might be dwarfed by rising production from within OPEC. "Higher production from Libya, Nigeria and Iraq are reducing the odds of such a deal rebalancing the oil market in 2017,” Goldman analysts wrote. Saudi Arabia says oil will last 70 years. Saudi Arabia plans on selling at least $10 billion in bonds in order to raise cash for its depleted treasury, and as part of its bond prospectus, it revealed that it expects its 266.5 billion barrels of oil reserves to last another 70 years, according to Bloomberg News. However, those numbers have not been independently verified and Aramco admits that the figures are difficult to precisely assess. The oil reserves figure of 266 billion barrels, for example, has not changed in years. Still, Aramco is moving forward with an IPO in 2018, and the 5 percent offering of what is expected to be a $2 to $3 trillion company could bring in roughly $100 to $150 billion.