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    Crude oil market

    Oil prices fall on expected oversupply...

    Oil prices fall on dimming prospect of output restraint
    Mon Apr 4, 2016 - Oil prices fell on Monday as the chances of Middle East producers agreeing to curb overproduction appeared to fade, while stubbornly high U.S. output and worries about Asia's economic outlook also dragged on prices.
    Iran, returning to global oil markets after sanctions against it were lifted in January, said it would continue increasing its oil production and exports until it reaches the market position it enjoyed before the imposition of sanctions, according to a media report. This makes a proposed deal by major producers to restrict ballooning output unlikely as top exporter Saudi Arabia said last week it would only participate if its rival Iran also took part.

    U.S. crude futures CLc1 were at $36.39 per barrel at 0554 GMT, down 1.06 percent or 40 cents from their last settlement, while Brent crude LCOc1 was down 0.9 percent or 34 cents at $38.33. A global glut has pulled down oil prices by as much as 70 percent since 2014. "Macroeconomic concerns and high petroleum inventories are the oil market's ball and chain and are likely to keep the oil price between the mid-$30s and low $40s in Q2," Barclays said. While some analysts expect a recent weakening of the U.S. dollar .DXY to spur demand for oil from importers holding other currencies, Morgan Stanley said "negative oil headlines, producer hedging at higher prices and bloated inventories" indicate any upside in prices will be limited.

    Adding to concerns of a global glut is U.S. production remains high despite steep cuts in drilling for new reserves as well as a jump in bankruptcies. "The U.S. oil rig count dropped further this week, with a total 10 rigs idled," Goldman Sachs said. "The current rig count implies U.S. production ... would decrease by 705,000 barrels per day yoy (year-on-year) on average in 2016, and by 375,000 barrels per day yoy in 2017," it added. So far, U.S. production remains stubbornly high, at over 9 million barrels per day.

    Despite a pick-up in recent economic data, including from India and China, analysts also poured cold water on hopes that Asia's economic prospects were improving. "Asia continues to face a structural growth problem one that will not be cured in the space of a few, short months," said HSBC's Frederic Neumann. Given a growing belief that prices might not recover by much any time soon, hedge funds have cut their net long positions in U.S. crude for the first time in six weeks. The chief executive of the Abu Dhabi National Oil Company said oil markets would only start to rebalance in 2016 and 2017.

    http://www.reuters.com/article/us-gl...-idUSKCN0X100H

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    We need to pull out of OPEC and quit pumping billions into the pockets of cavemen who dress in designer jeans.

    We have entire communities in the US that are suffering because the price of crude is so low they can't afford to pay the drillers.

    Saudi, the big player in all of this, in the meantime, has cranked up its execution of citizens who attempt to criticize the government or speak out against religious law.

    They're doing that on OUR dime. We made them the dominating power they are today.

    We need to get out of OPEC and let those $#@!s sink.

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    Quote Originally Posted by FindersKeepers View Post
    We need to pull out of OPEC and quit pumping billions into the pockets of cavemen who dress in designer jeans.

    We have entire communities in the US that are suffering because the price of crude is so low they can't afford to pay the drillers.

    Saudi, the big player in all of this, in the meantime, has cranked up its execution of citizens who attempt to criticize the government or speak out against religious law.

    They're doing that on OUR dime. We made them the dominating power they are today.

    We need to get out of OPEC and let those $#@!s sink.
    I don't understand "get out of OPEC". The US isn't a member.
    It's ok if you disagree with me. I can't force you to be right.

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    Quote Originally Posted by hanger4 View Post
    I don't understand "get out of OPEC". The US isn't a member.
    Purchasing from OPEC.

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    Quote Originally Posted by FindersKeepers View Post
    We need to pull out of OPEC and quit pumping billions into the pockets of cavemen who dress in designer jeans.

    We have entire communities in the US that are suffering because the price of crude is so low they can't afford to pay the drillers.

    Saudi, the big player in all of this, in the meantime, has cranked up its execution of citizens who attempt to criticize the government or speak out against religious law.

    They're doing that on OUR dime. We made them the dominating power they are today.

    We need to get out of OPEC and let those $#@!s sink.
    You do realize that the nation as a whole is benefiting from those low oil prices right? Yea, a few oilfield workers are getting laid off but that is minuscule in comparison.

    Also, do really truly care what the Saudis are doing to their citizens? Is it really our business? Is it our job to fix?
    I can explain it to you, but I can't understand it for you.

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    Quote Originally Posted by FindersKeepers View Post
    Purchasing from OPEC.
    Oooooooooh.
    It's ok if you disagree with me. I can't force you to be right.

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    Quote Originally Posted by Crepitus View Post
    You do realize that the nation as a whole is benefiting from those low oil prices right? Yea, a few oilfield workers are getting laid off but that is minuscule in comparison.
    You're not even close to being right.
    Yes, some areas have seen boosts in business and consumerism due to lower gas-at-the-pump costs. Many states, however, are suffering. It's not even close to being "minuscule."

    Problem is -- short-sighted individuals relish in the thought of cheap gas, and it does help put a bit of money back in their pockets, but rarely do they see the damage on a large scale.

    http://www.slate.com/blogs/moneybox/...e_economy.html
    http://www.bloomberg.com/news/articl...global-economy
    http://www.washingtonexaminer.com/im...rticle/2586786
    http://www.energyfuse.org/low-oil-an...economic-woes/


    Also, do really truly care what the Saudis are doing to their citizens? Is it really our business? Is it our job to fix?
    You obviously don't care -- as I sort of expected, but that's the point. Should the US have any qualms about pumping billions into foreign economies when those nations do not adhere to basic human rights? No one said we should "fix it" (except you), but should are you comfortable in being held hostage to nations that regularly execute gays and those who do not agree with the status quo? Because, if you do -- you're just another enabler.

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    The US is hurt by low oil and helped by it. Probably more good than bad. At least we are not like a lot of countries that heavily depend on high oil.
    Alea iacta est

    Check out the blog.


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    Red face

    Iran doesn't get it's way...

    The OPEC-Russia Freeze Is Already Dead
    Apr. 4, 2016 - Summary

    OPEC - Russia deal was already poised to fail.

    The deal saw all parties freeze production at (or near) record levels -- not closing the supply - demand gap.

    Saudi Arabia announced they will not freeze if Iran does not freeze production (which is very unlikely).

    Russia keeps increasing production levels (and exports) as well.

    Oil prices formed a low and rallied when a plan between Russia and several OPEC members was announced, which saw each country limit its production levels to the output seen this January. I believe this deal wasn't very effectual in the first place, but with the most recent data we see that it will likely not propel oil prices higher unless major changes are made to this plan. The plan originally saw OPEC members as well as Russia freeze their output at the production levels they reported for January 2016 -- this would have been not very efficient in propping oil prices up, as OPEC as well as Russia produced oil at a very high rate in January. Freezing production at (or near) record levels is not a great idea if your goal is reducing production to balance the supply and demand gap.


    In this chart we see that OPEC production was very close to its record high in January 2016, up 130,000 barrels a day from the December level, up 500,000 barrels a day from the 2015 average and up 1.5 million barrels a day from the 2014 average. Since the global supply and demand imbalance stands at 1.5 million to 2.0 million barrels of oil each day, freezing production just 80,000 barrels below last year's peak production number (reported for November) is not the appropriate way to balance this gap. On the other side of the deal we had Russia, which reported record production in January as well: The country produced 10.88 million barrels a day in January, which was a post Soviet record for the country, thus positioning the country to freeze production at record levels (once again, not the right move if your goal is to balance a huge overproduction issue).

    The deal was already proposed to fail, but recent news will mean the chance of a beneficial impact on the global supply - demand gap will be even lower: On Friday Saudi Arabian official (and deputy crown prince) Mohammed bin Salman announced that Saudi Arabia would only participate in a production freeze if all other OPEC countries, including Iran, as well as non-OPEC members such as Russia would freeze production as well. As we know Iran is not looking towards freezing production any time soon, as the country desperately seeks to expand oil production after sanctions have been lifted a couple of months ago. The EIA forecasts that Iranian oil production will average 3.1 million barrels of oil in 2016, and 3.6 million barrels of oil in 2017.


    This would represent a huge increase of almost thirty percent over 2015's production level of 2.8 million barrels a day. Iran thus does want to freeze production at the current level at all, which ultimately means that Saudi Arabia will not want to freeze production either (according to the Prince's words). As if this wasn't already bad enough, Russia -- the other major country in the deal -- does not seem to be willing to freeze production either. In March the country's production hit 10.912 million barrels a day, which was an increase of two percent in comparison to the prior year. This production level also was higher than the one in January, which (according to the production freeze deal) should have been the absolute limit. Apparently Russia is not seeing any benefit in following the plan which was already poised to fail (as, even when every country agreed to freeze production at the January level, the supply - demand gap would not have closed), and with Saudi Arabia's announcement that they will not participate if Iran does not freeze its production (which is very unlikely), it seems the two biggest producers of the proposed production freeze are both not willing to actually act on it.

    Due to lower consumption in the country, Russian oil exports rose by ten percent yoy (to 5.6 million barrels a day) in March, which means pressure on global oil prices will be even higher, as the country is selling a growing amount of its production on the global market (instead of consuming oil in the country). In April OPEC members and Russia will once again come together to discuss coordinated moves towards production freezes (or production cuts), but if we use past meetings and agreements as a guideline, we can assume that the efforts will not be very fruitful. If those countries would agree on a production cut by five percent, and every member would actually do so, the global supply - demand gap would be closed and oil prices could rally substantially, but I believe such an agreement is rather unlikely.

    Takeaway
    See also:

    Asian shares slide; frazzled by Fed, falling oil prices
    Tue Apr 5, 2016 - Asian shares and other riskier assets skidded on Tuesday, pressured by slumping crude oil prices and mixed messages from Federal Reserve policymakers on the outlook for U.S. interest rate rises.
    Oil prices continued to drop after shedding more than 2 percent overnight, as investors doubted that oil producing countries would freeze output to address a global glut. Brent lost 0.4 percent to $37.54 a barrel after losing 2.5 percent on Monday. U.S. crude lost nearly 3 percent overnight, and on Tuesday was down about 0.5 percent at $35.53. European shares are seen falling, with spread-betters expecting Germany's DAX to fall as much as 1.0 percent and Britain's FTSE 0.5 percent.

    MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.3 percent. Japan's Nikkei stock index dropped 2.4 percent to an eight-week closing low, as the perceived safe-haven yen rallied. "Investors are concerned that Japanese companies are losing their 'weak-yen appeal'," said Kazuhiro Takahashi, equity strategist at Daiwa Securities. "Many people are thinking it would be difficult for exporters to forecast on-year gains in their earnings for this fiscal year."

    Commodity-related and industrial shares helped drag down U.S. stock indexes overnight, and U.S. economic data suggested that economic growth remained sluggish in the first quarter. New orders for manufactured goods dropped in February, as they have in 14 of the past 19 months, while business spending on capital goods was much weaker than initially believed. That gave investors no reason to believe the U.S. Federal Reserve would raise interest rates anytime soon, in line with the cautious tone Fed chair Janet Yellen sounded last week that contrasted with more hawkish remarks from other Fed policymakers.

    Boston Federal Reserve President Eric Rosengren was the latest to fly into the hawkish zone on Monday, calling it "surprising" that futures markets currently price in just one or even no rate hikes this year, which he said could prove "too pessimistic." "Rosengren is usually on the dovish side of the spectrum, highlighting how out of line Fed chair Yellen sounded last week compared to her colleagues," Sean Callow, senior currency strategist at Westpac, said in a note.

    MORE

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    Thumbs up

    Oil prices rises in spite of oversupply...

    Oil rises on firm U.S., German growth but traders warn of ongoing glut
    Fri Apr 8, 2016 - Oil prices rose on Friday, lifted by firm economic indicators from the United States and Germany which could support fuel demand, but analysts warned that crude markets were threatened by another downturn because of ongoing oversupply.
    Front month U.S. West Texas Intermediate (WTI) crude futures were trading at $38.02 per barrel at 0653 GMT, up 76 cents, or 2 percent, from their last close. International Brent futures were up 60 cents at $40.03 a barrel. "We believe the current oil price is unsustainable and expect a fundamental price recovery when markets move into better balance in mid- to late-2H16," investment bank Jefferies said on Friday, although it added that "the recovery could be protracted." Traders said there was some bullish sentiment in oil markets early on Friday following statements by the U.S. Federal Reserve that the world's biggest economy was on the path of more economic growth.

    In Europe, rating agency Moody's said that Germany - the continent's biggest economy - expected a slight acceleration of its growth to 1.8 percent, benefiting from robust domestic demand. Despite encouraging reports from two of the world's biggest economies, analysts warned that oil prices could fall again soon as there were few signs that a global overhang in production of at least 1 million barrels per day (bpd) would be addressed soon. "Investors are lacking confidence about improved U.S. seasonal demand, as a decline in U.S. crude stockpiles (reported earlier this week) was mainly attributable to weaker imports and improved refinery utilisation," ANZ bank said.

    Outside the United States and especially in parts of the Middle East, production is still soaring. Iraq said on Thursday that exports from its southern ports had hit almost 3.5 million bpd by April, up from an average of 3.29 million bpd in March, putting doubts on the feasibility of a planned meeting by major producers on April 17 to freeze output levels.

    Iran, which was relieved from crippling international sanctions in January which had cut its crude exports to little more than 1 million bpd, has said it would only participate in a production freeze once it had regained its pre-sanctions levels of 4 million bpd, pouring cold water on any hopes that ballooning oversupply can be reined in soon. ANZ bank said that there were signs that a renewed downtrend could be imminent for crude oil prices.

    http://www.reuters.com/article/us-gl...-idUSKCN0X503E

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