Commodity Trade Mantra

Posts Tagged ‘Saudi Arabia’

End of Driving Season Means More Declines In Crude Oil Prices

The driving season ends next month, which is when most refineries shut down for maintenance after operating at near-full capacity during the summer months. This is—historically—when gasoline demand subsides. The end of summer travels is also when gasoline stockpiles in the U.S. could increase, further pushing down crude oil prices.

End of an Era: The Rise and Fall of the Petrodollar System

Similar to the paradigm shift – the transition to the petrodollar system that followed with the collapse of the Bretton Woods system, there is another major shift underway today. We will know its consequences in full, the day oil-producing countries demand gold for their oil, instead of dollars. The Gulf states are seeking measures to reduce their dependence & exposure to the US dollar.

Why Any Major Crash in Oil Prices Remains Unlikely

At oil prices below $40 a barrel, virtually no new drilling occurs. As a result, oil prices today may be artificially boosted by market speculation, but as long as they don’t go high enough to lead to significant new drilling, fundamentals will eventually catch up and production will fall dramatically. That in turn will support current oil prices and perhaps even higher prices in the future.

Saudi Market Share Hit As Russia Doubles Oil Exports To China

Russia had overtaken Saudi Arabia as China’s leading supplier of crude oil at the end of last year. Russia’s exports to China had more than doubled over the course of the past years — an increase equivalent to 550,000 barrels a day, while the two major oil suppliers – Saudi Arabia and Iran, saw their Chinese oil orders decline year-over-year.

Iran Offers Discounts On Asian Crude Oil, Hits Saudi Where It Hurts Most

Iran has introduced a discount on the June contract for its heavy crude oil going to Asia, just after Saudi Arabia announced a price increase for its own June contract for the continent. With the discount, Iranian crude oil will be noticeably cheaper for Asian clients than both Saudi and Iraqi crude. Saudi Arabia and Iran are playing a game of barrels & Asia is the ultimate prize.

Here's What Saudi Arabia’s New Oil Policy Will Look Like

Ali al-Naimi’s termination & Prince Mohammed’s official ascent to the top of the Saudi oil chain of command are likely bearish in the short term, as Saudi Arabia reverts to its 2014 strategy of pushing oil prices low enough to put marginal producers out of business. What does this mean for oil, since Khalid Al-Falih is likely to follow Naimi’s policy of safeguarding Saudi Arabia’s market share?

Can Crude Oil Prices Continue To Rally Like This?

Oil prices have bounced around a bit after last week but have held more or less in the range of $43 per barrel for WTI and $45 for Brent. The price gains over the past few weeks come as the fundamentals have improved. Oil production is expected to continue to fall through 2017 as too few new wells come online to replace rapidly falling shale output.

Watch How The Petrodollar Di(v)es As US - Saudi Relations Crack

U.S.-Saudi interests are diverging in many ways. Saudi Arabia’s 40-year pact with the United States is on the verge of ending. What happens next will have ramifications for the dollar for decades to come. We could be nearing the end of the petrodollar & I would not want to be holding U.S. Treasuries. With current interest rates I don’t want to hold them anyway.

Oil Prices Rise Despite Threat of Potential Supplies

Oil prices are expanding their rally despite the failure of the Doha meeting. Traders are now concentrating on the declining North American production. US producers have lost their potential of investing in growth opportunities amid a decline in crude oil prices from $120 to below $30 a barrel. Oil supplies from Canada, US & Latin America could decline by 700,000 barrels per day this year.

Doha Is Done, Saudi Prince Says - No Oil Deal Without Iran

In what appears to be a Doha party-pooping statement, Saudi deputy crown prince Mohammed bin Salman stated unequivocally that The Kingdom won’t restrain its oil production unless other producers, including Iran, agree to freeze output at a meeting this weekend in Doha. If there is no agreement, then expect a sharp oil market sell-off on Monday.

Why Oil Prices Will Rise And Many Will Be Caught By Surprise

Oil industry investment is far below levels required just to replace production. The only thing that will change the vector of these declines is lots of spending, and the only thing will spur lots more spending is higher oil prices. Just like all the oil bulls had to be run out during the declining price stage, all the price bears will be run out when fundamentals hit them over the head.

China And India Rewrite The Rules Of The Oil And Gas Game

Asian oil markets are in a tremendous period of flux. Both China and India are using the drop in oil prices and the existing oil gut to their advantage. New partnerships are being formed and steps are being taken, which undermine the erstwhile major players. Each crisis brings about a change, and the current one is shifting the power from the suppliers to the consumers.

Oil Prices Drop After IEA Warns Production Freeze Is "Meaningless"

A deal among some OPEC producers and Russia to freeze production is perhaps “meaningless” as Saudi Arabia is the only country with the ability to increase output, a senior executive from the International Energy Agency (IEA) said. It’s more some kind of gesture which perhaps is aimed … to build confidence that there will be stability in oil prices.

Have Oil Prices & Markets Grown Numb To Supply Disruptions?

The idea that there is a major glut in oil supplies has been overstated. Surpluses in the past have been higher & oil prices did not collapse. Oil price discovery is basically made in the highly leveraged oil futures market & speculators exaggerate oil price movements on the upside as well as the downside. Just as fast prices fell because of them in the futures market, they could drive prices up.

Why Saudi Arabia Has No Intention To End The Oil Glut

As the shale oil revolution had sustained momentum at oil prices near $100, Saudi Arabia began the second most rapid rig count expansion in its history starting in late 2013. While Saudi Arabia & OPEC have talked intermittently about increasing demand & decreasing supply, their actions have not always comported with the distracting, laissez-faire attitude suggested by their commentary.

Victory For Saudi Arabia, North Dakota's Largest Oil Producer Suspends All Fracking

Reuters reports, that North Dakota’s largest producer, Whiting Petroleum, would suspend all fracking, and that Continental Resources has effectively done the same after reporting that it no longer has any fracking crews working in the Bakken shale. It was also a confirmation that the Saudi plan to put high-cost producers on ice is working, if only temporarily.

Cash Flow Negative US Energy Companies Have $325 Billion In Debt Among Them

With the topic of distress among U.S. oil and gas exploration and production companies becoming more important with every passing day that oil not only continues to drop, but certainly fails to rebound to levels that allow US energy companies to return to a cash flow positive state, we would like to show just how much debt is at stake.

Stop Blaming OPEC For Low Oil Prices

Why do we expect OPEC to cut oil production? The US has aggressively increased output. Much of the responsibility for the crash in oil prices stems from a massive increased output in the US shale patch, by around 4 million barrels per day between 2011 & the peak in 2015, nearly doubling production from 5.6 million barrels per day (mb/d) to 9.6 mb/d.

Time to Play the Rebound In Oil Prices

The oil industry is permeated in gloom right now because of oversupply & weak demand. Small producers are going out of business & a wave of energy-related bond defaults is about to wash over the fixed-income markets. But the oil majors are positioning themselves to benefit from the rebound of prices in late 2016 and early 2017. The time to play this rebound is now.

The $5 Trillion Oil Debt Bomb

Oil below US$60 is more than low enough to do an enormous amount of damage in financial markets. When many oil producers went for loans, the industry’s models showed oil prices between US$80 and US$150. So suddenly, there’s a bunch of debt out there that producers will not be able to pay back with the money they make at US$50 a barrel.

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