OPEC+ debates biggest-ever oil cut, awaits U.S. efforts

[turbinetree]

Source: Reuters

BUSINESS NEWS APRIL 3, 2020 / 4:53 AM / UPDATED 42 MINUTES AGO

Rania El Gamal, Alex Lawler, Vladimir Soldatkin
6 MIN READ

DUBAI/LONDON/MOSCOW (Reuters) - OPEC and its allies are working on a deal for an unprecedented oil production cut equivalent to around 10% of global supply, an OPEC source said, while also waiting to see what action the United States would take as U.S. President Donald Trump met with oil companies on Friday at the White House.

In a subsequent phone conference, U.S. Energy Secretary Dan Brouillette told industry executives that the White House is not negotiating with Saudi Arabia or Russia, and is encouraging them to come together to reach an agreement to cut production, a source who listened to the call said.

The oil market has crashed, with prices falling to $34 a barrel from $65 at the beginning of the year, as a result of the coronavirus pandemic. Fuel demand has dropped by roughly a third, or 30 million barrels per day, as billions of people worldwide restrict their movements.

A global deal to reduce production by as much as 10 million to 15 million barrels per day would require participation from nations that do not exert state control over output, including the United States, now the world’s largest producer of crude.

Read more: https://www.reuters.com/article/us-oil-opec-cut-size/opec-debates-biggest-ever-oil-cut-awaits-u-s-efforts-idUSKBN21L15A?il=0

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-snip-

This is going to be interesting come this next week...............

[bucolic_frolic]

1. Free market capitalists fixing price to line their pockets

Thanks, time to fill up the tank even if it sits for a month or two.

[at140]

2. Gonna fillup both cars with $1.50 gas...nt

[OAITW r.2.0]

3. The glut is growing. Storage is fast approaching max. capacity,

We may see negative oil prices, but where are you going to store the product? We are months away from an energy demand restart in the world economy. They should stop pumping it out of the ground.

[BumRushDaShow]

4. Saudi and Russia were doing it out of spite.

[turbinetree]

5. Yepper spot on....................

exactly..................hey trump who's your buddy now,,,,,,,,,,,,,,,,,,,

[OAITW r.2.0]

6. Pump and Dump? That will help the environment....nt

[BumRushDaShow]

7. Supposedly Saudi wanted Russia to cut their production to get the prices up

and Russia refused (oil is pretty much their main money-maker). So Saudi was gonna teach 'em a lesson and hit the turbocharger on their pumps, flooding the market and crashing the price of oil down to ~$20 (for WTI).

They apparently came up with some agreement yesterday, so now (at least WTI) futures are back up to $29/bbl. Brent is up to ~$37/bbl.

[OAITW r.2.0]

8. I'm more concerned with the demand side of the equation.

It's not there now and I suspect it will scale downward in the short term, at least. So where are they gonna store it?

[BumRushDaShow]

9. That's why the prices crashed

They decided to do their oil pumping "war" right when the demand has plummeted worldwide.

And storing? Ha! How many times have we seen news articles over the years about pipelines being "sabotaged" (by some hitherto unknown "rebel group" ), or oil fields on fire, or "leaking tankers" and whatnot, when "someone" wants to suddenly reduce supply.

[yaesu]

10. There will be a dead cat bounce but just like the interest rate cuts it won't last long

for the oil markets & just like interest rate cuts they don't have anymore tricks up their sleeve to stabilize prices. Demand will continue to sink big time.

[OAITW r.2.0]

11. A new US Energy policy has to happen.

Decentralized, labor intensive energy grids as part of our infrastructure rebuild. Put lots of people to work selling/installing/maintaining solar/wind/storage technologies. We won't need to spend $500BB/year providing US forces guarding the Arabian oil supply chain.

[paleotn]

18. The Russians also had the dumb idea....

of crashing oil prices below US shale producer's break even in a bid to bankrupt the shale industry. Sure, US frackers are debt financed to the hilt, but so what? Some current producers default and go bankrupt. But as oil prices recover, there's more than enough capital to reinvest in new fracking operations. The oil is still locked in the shale. The US still has an insatiable appetite for that oil. Back to square one.

The Saudi's tried this same short sighted strategy a decade ago and failed miserably. What was then a minor annoyance in the global oil market became a major force when oil prices recovered and investment helped improve technology and operations. It was Darwinian. Those that survived and new kids on the blocked learned lessons and became even more of a threat to OPEC+ dominance.

Sometimes I wonder if Riyadh, Moscow and the rest just don't fundamentally understand how things work economically in the west, particularly in the US. Sure, as youngsters, they're educated in our universities. Learn about our financial system and ways of doing business, but in the end it just doesn't sink in. If there's money to be made at some future date when oil prices rise, the capital to make that money will magically appear. Next to death and taxes, the only constant in a free market economy.

https://www.forbes.com/sites/arielcohen/2020/03/10/russia-targets-us-shale-with-oil-price-war/#c4c3a4159b9f

[BumRushDaShow]

20. You have the other issue of Russia's oil

being difficult to extract due to being locked up in mountain ranges - perhaps with extraction strategies being as intensive as the fracking here - and that is what Tillerson was originally helping them with before he had been appointed (and later fired) as SoS. Who knows where he is now.

[SWBTATTReg]

27. Sure, they trained in our schools, and learned our economic policies, but it doesn't mean that...

they'll alter their policies, after all, Russia is ruled by a dictator and the Saudi, by a monarchy, both of whom set the prices of their oil, not the markets. The relationship is doomed from the very get go. Why did the markets act so upset when the announcement was made (just when the CV was starting to take root)? I think as usual, the markets overreacted as usual, for no logical reason and then when the reality of the actual situation on the ground sunk in, those that have a little more foresight, are the ones that are making the money. Right now, oil prices are depressed and will be for some time, due to depressed demand across the entire globe. I laugh, because talk about poor timing in making their announcement (Russia and the Saudi)...they couldn't have picked a worse time.

[Chainfire]

26. But wait!

Are you trying to tell us that Russia and Saudi are not our friends? Say it ain't so.

[BumRushDaShow]

28. Au contraire

They are our best buds!!!11!!!!!!! Yeah that's the ticket! Honor among thieves and stuff!!111!!!

[pbmus]

12. Restart in A month, you are really an optimist..

I say more like next year, about this time ...

[3Hotdogs]

13. I could fill my tank a coupl'a times at that price, but I ain't got nowhere to go.

Everything's shut down.

A tank that used to last me 3 days, now lasts 2 weeks because the only place to go, is grocery shopping.

Now, multiply that by a few million other cars. lower production and the fuel will still be in storage ---unrefined.

[The Mouth]

14. As long as gas costs more than a buck a gallon

fuck them, fuck everyone in the entire chain.

If you're a working man and have to fill a Chevy longbed full of tools, to hell with Texas, to hell with ecowarriors, to hell with the Saudis.

[McCamy Taylor]

15. No one is flying. No one is driving. Won't make any difference.

[ProfessorGAC]

16. I Call BS

They're cutting production because they're running out of storage capacity.
The article itself says the demand has fallen by 30 million. So they cut production by 10 or 15. That is clearly to preserve the space and buy time without having to shut down completely.

[paleotn]

19. Well, there's is a finite amount of space

to store extracted oil. A gross miscalculation of the CvD-19 impact on the global economy I think. Why would anyone in their right mind increase production when there's a significant risk of a massive decline in consumption? Guess they weren't listening to their epidemiologists either.

[ProfessorGAC]

21. They're Puking On Themselves

These petrostates are mostly countries who have an export portfolio that looks like #1-oil, #895-whatver else comes next.
Revenues plummeting for long is going to make US problems look like a boom.

[gab13by13]

17. I heard reports that Russia and SA,

will cut production so long as the US cuts production. If this is true, it may not be, then Trump is in a big bind. I understand that Russia and SA depend more on oil and gas as a % of their economies but why should those countries cut production to get the price of oil back up while the US increases production?

[ProfessorGAC]

22. US Doesn't Have To Increase Production

Demand is down >30%. If the US & Canada stay at current rate, there's still enough for North America.
Still means these countries can't influence prices like they're used to.
They need the US so substantially reduce production. Go far enough, and oil firms start laying off. That makes US employment issues worse.
Any smart business person would stand pat. Of course, smart doesn't apply to our DOLTUS.

[Yavin4]

23. Does it matter? The world is working remotely.

Except for delivery drivers.

[howardmappel]

24. Price setting / production decrease

And unlike Russia and SA, it is doubtful that the feds have the ability to force US oil producers to cut production. IMHO that would require the Feds to pay the producers, which would then result in other, now not producing producers, to step up or resume their production. The US doesn't really have the ability to force a production reduction.

[JCMach1]

25. Doesn't matter what they do... Countries will pump because that's their sole income

Oil is in a death spiral price/supply pattern...

[Miguelito Loveless]

30. Precisely.

Add to their headache that EVs are rapidly becoming a thing, along with roof-mounted solar prices continuing to fall, and things get worse. I haven’t been to a gas station in four years, and they could not pay me to go back to gasoline.

[JCMach1]

33. Precisely, My Volt doesn't care about the price of your gas

Haven't put any since August 2019...

Added bonus, don't have to even ride around to keep functioning. It's plug and play ... Just fine right off the shelf

[Miguelito Loveless]

34. The Volt is a wonderful car

A plug 🔌 n hybrid that seldom burns gas.

Of course, GM discontinued it.

[JCMach1]

35. Most commuters would never burn gas

And seriously one of the best cars GM ever made...

[Miguelito Loveless]

36. We went from 800+ gallons a year

With two Ice cars, to under 40 with a Volt and a Leaf

[Eugene]

29. OPEC+ meeting delayed as Saudi Arabia and Russia row over oil price collapse: sources

Source: Reuters

BUSINESS NEWS APRIL 4, 2020 / 7:59 AM / UPDATED 14 MINUTES AGO

OPEC+ meeting delayed as Saudi Arabia and Russia row over oil price collapse: sources

Rania El Gamal, Vladimir Soldatkin, Alex Lawler
6 MIN READ

DUBAI/MOSCOW (Reuters) - OPEC and Russia have postponed a Monday meeting to discuss oil output cuts until April 9, OPEC sources said on Saturday, as a dispute between Moscow and Saudi Arabia over who is to blame for plunging crude prices intensified.

The delay came amid pressure from U.S. President Donald Trump for the Organization of the Petroleum Exporting Countries led by Saudi Arabia and its allies, a group collectively known as OPEC+, to urgently stabilise global oil markets.

Oil prices hit an 18-year low on March 30 due to a slump in demand caused by lockdowns to contain the coronavirus outbreak and the failure of OPEC and other producers led by Russia to extend a deal on output curbs that expired on March 31.

OPEC+ is working on a deal to cut the production of oil equivalent by about 10% of world supply, or 10 million barrels per day, in what member states expect to be an unprecedented global effort including the United States.

Washington, however, has yet to make a commitment to join the effort and Russian President Vladimir Putin on Friday put the blame for the collapse in prices on Saudi Arabia - prompting a firm response from Riyadh on Saturday.

-snip-

Read more: https://www.reuters.com/article/us-oil-opec-saudi-russia/opec-meeting-delayed-as-saudi-arabia-and-russia-row-over-oil-price-collapse-sources-idUSKBN21M0FY

[Generic Other]

31. I haven't driven in a month

Bad time to try and raise the price of something most of us aren't buying.

[dalton99a]

37. Trump would never do what Putin asks