Author Topic: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.  (Read 199798 times)

Cardboard

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"The consensus is we are going to do whatever it takes to balance the market. If that means trimming supplies by a million (bpd), we will,” Saudi Arabia’s al-Falih said Monday.

https://www.cnbc.com/2018/11/12/opec-analysis-shows-need-for-a-production-cut-of-1-million-bpd.html

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”

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Joe689

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Saudi's getting aggressive.    Be no reason for Russia not to follow suit.  They already said they will go with the consensus.    So it looks like a cut is almost guaranteed. 

I think there is some relation dynamics to this as well.  The Khashoggi killing evidence is looking worse and worse for the Saudis.   Seems to me that there will no choice but to hold them accountable in some way.   US will likely act together with allies.   Mid term elections are over, US will be forced to lay the hammer on Saudi... I think this spells higher oil prices as the Saudi's will now get aggressive with prices.


SharperDingaan

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Saudi's getting aggressive.    Be no reason for Russia not to follow suit.  They already said they will go with the consensus.    So it looks like a cut is almost guaranteed. 

I think there is some relation dynamics to this as well.  The Khashoggi killing evidence is looking worse and worse for the Saudis.   Seems to me that there will no choice but to hold them accountable in some way.   US will likely act together with allies.   Mid term elections are over, US will be forced to lay the hammer on Saudi... I think this spells higher oil prices as the Saudi's will now get aggressive with prices.

You might want to keep in mind that what SA & Russia does not produce, Iran can (via market displacement).
SA & Russia also may well not be able to sustain output at the current level (production + storage), & Trump wants lower oil prices, not higher ones.
(assumes SA actually has the money to pay for all the big deals they've recently been signing).

To many people - Iran was sent an olive branch. 
Work with us to raise prices (by not compensating for our cutbacks) and we'll work with you to find a way out of the current sanctions?
Both our regimes survive the coming changes?

Just a different point of view.

SD



sculpin

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From Marshall Adkins of Raymond James today...

Conclusion: Near term oil prices torpedoed by Trump, but 2020 Brent prices still headed to $100/bbl

As we’ve covered in today’s report, several bearish factors have converged in the past few weeks (since our oil upgrade) to drive a
sharp downward correction in oil prices. Despite the oil price collapse, our global oil model has not changed and we still believe the
long term fundamentals point to meaningfully higher oil prices over the next two years. So, what drove the oil collapse? First and
foremost it was Trump backing away from his commitment to “put the screws” to Iran. Additionally there have been several other
bearish oil drivers including: 1) increasing U.S. oil inventories, 2) robust U.S. production growth for August, 3) the potential restart of
the neutral zone, 4) increasing concerns about future global oil demand growth, and 5) the resulting technical breakdown and
massive reversal in speculative position – all came to “bear” in relatively short order to drive more than a 20% correction from the
recent oil price peak. But more importantly, what have these transitory factors changed in regard to our oil model. Our answer is
not a whole lot, from a long term supply demand perspective.
Fine, oil prices are still on track to be meaningfully higher in 2020 – but, what catalysts get oil prices moving and when will they show
up? To begin with, the speculative oil positions have now shifted into oversold territory. That means any positive data points over
the next few months could easily drive a sharp upward recovery rebound. With the midterms now behind us and oil prices
noticeably lower, we expect Saudi will proactively temper output (and we think a modest supply swing would have a big impact on
inventories). Additionally, we think there is still potential upside relating to how much Iranian production comes off line. All in, the
next few months could continue to be sloppy for oil prices but we expect enough bullish catalysts to emerge in early 2019 to reverse
the meltdown of the past few weeks. More importantly, the oil market is still on track for Brent prices to move above $100/bbl in
2020.

sculpin

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RJ pdf attached...

Cardboard

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Spekulatius

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Saudi's getting aggressive.    Be no reason for Russia not to follow suit.  They already said they will go with the consensus.    So it looks like a cut is almost guaranteed. 

I think there is some relation dynamics to this as well.  The Khashoggi killing evidence is looking worse and worse for the Saudis.   Seems to me that there will no choice but to hold them accountable in some way.   US will likely act together with allies.   Mid term elections are over, US will be forced to lay the hammer on Saudi... I think this spells higher oil prices as the Saudi's will now get aggressive with prices.

Agreed. The only reason the hammer didn’t come down yet on the Saudi‘s is because Trump wants lower crude prices.
To be a realist, one has to believe in miracles.

Cardboard

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Do you recall earlier this year when there was a massive spike in VIX volatility due to speculators unwinding bets on low volatility.

Now it seems to be in natty:

https://www.themacrotourist.com/posts/2018/11/13/chipper/

What the author is missing however is that fundamentals for nat gas are really good with inventories well below normal, weather much colder than normal, LNG plants ramping up in the U.S. and new nat gas pipelines starting up and being built to Mexico:

http://ir.eia.gov/ngs/ngs.html

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sculpin

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So (if this data from HFIR is accurate) December could bring very large drops in US oil inventories and very strong NG prices. Along with the end of tax loss selling, the performance of energy equities could be quite surprising...


@HFI_Research

October was one of the lowest exports ever to the US from Saudi, Mexico, Iraq, and Venezuela.

November may break that October low.

Implications? Watch US crude imports starting the end of Nov into Dec.

#OOTT $USO

 
https://blog.clipperdata.com/misdirection-of-houdini-sized-proportions

 
http://blog.gorozen.com/blog/interim-special-report-on-the-oil-sell-off?utm_campaign=Blogs&utm_content=79974515&utm_medium=social&utm_source=twitter

 

 

Uccmal

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FWIW Sculpin, I think the Canadian Oil patch is in tax loss selling mode right now.  I guess we wait a few weeks and see if things turn even without any change in fundamentals. 
GARP tending toward value