Oil Erases 2016 Gains as Saudis Say Output Freeze Hinges on Iran

[Purveyor]

Source: Bloomberg

April 1, 2016 — 3:25 PM EDT

Oil erased its gains for the year in New York as Saudi Arabia’s deputy crown prince said the kingdom will only freeze production if Iran and others follow suit.

Futures capped a weekly decline of 6.8 percent, the first since mid February. With producers scheduled to meet in Doha this month to complete an accord on capping output, Saudi Arabia’s Mohammed bin Salman signaled in an interview with Bloomberg that if any country raises output, the kingdom will also boost sales. While Iran will attend the talks, it has ruled out limiting supply as it restores exports after sanctions were lifted in January.



"The Saudis are now saying that they will only freeze if everyone else lines up behind the idea," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "That makes the meeting useless since the Iranians are going to continue increasing output."

Oil rose 14 percent in March as it rebounded from a 12-year low amid speculation the global glut will ease as U.S. output falls. Russia will join Oman and every member of the Organization of Petroleum Exporting Countries apart from Libya in Doha on April 17 to discuss freezing production. OPEC members, led by Iran and Iraq, boosted output in March, a Bloomberg survey showed.

Read more: http://www.bloomberg.com/news/articles/2016-03-31/oil-trades-near-38-as-dollar-recovers-u-s-stockpiles-grow

[nichomachus]

1. So, are we cheering now for more expensive energy costs? nt

[Purveyor]

4. Only if one wants this country to go into recession... eom

[Kelvin Mace]

6. I would point out that cheap oil

Is bad for the planet. So, people need to get their priorities straight.

[Socal31]

7. Expensive oil is bad for the poor.

The middle-middle and upper-middle can afford to spend a little extra filling up their Explorpeditioncurisiontrailblazer.

Those who live in an area with limited public transportation often have no other choice than personal vehicles.

[Kelvin Mace]

8. This all depends if you take a long or short term view

Short term, expensive oil is not good for the poor. Long term, it would mean more jobs, especially if we used taxes to raise the price. When oil was climbing past $100 on its way to $150, with $200 looking entirely possible, a interesting thing started to happen. A lot of our customers (we are a manufacturer of machine parts) started to bring their jobs back from China to us. With high oil prices, transport costs began eating into the price difference and it suddenly made more sense to start sourcing locally again. We made a better product and we had way shorter lead times (1-2 weeks) and transit times were 1-2 days (compared to 6-9 weeks from China). So, we started hiring again because we had more work. Now that oil prices collapsed, we are seeing jobs being pulled and being sent back to China.

High oil prices, especially if we doubled taxes on fuel, would hurt short term, but would fund desperately needed infrastructure projects, which would drive jobs. Removing subsidies from oil/coal/gas would also make solar/wind projects immediately competitive, again meaning more jobs. It would speed overhaul of the electric grid and the switch to EVs, driving down carbon in the air.

So, I would prefer that government raise the prices via taxes, than oil companies via profit.

[TexasBushwhacker]

9. +1

A higher price that us stable is better than it doubling or tripling then dropping by half.

[Skink]

2. We kept the Iranian oil off the market as long as we could

Sorry S Arabia

[highoverheadspace]

3. The article is a bit ridiculous.

A barrel of crude is at 37 today, down from 40 a week ago. Previously it was at 20 back in January. I don't see any serious "gains" erased. It simply went down a couple of points today which is quite normal. http://oilprice.com

[Lucky Luciano]

5. I think the low was $26 on Feb 11 or so.

26 to 42 was a galactic sized bounce of over 60% in about a little over a month - imagine the S&P jumping from 2000 to 3200 over the next six weeks!!!

[Sunlei]

10. USA oil wells nearest the refineries restarted recently, for highest gasoline profits.