OPEC ready to talk, boosting oil prices

Summitric

SUPER COOL MOD & Supporting Vendor
Moderator
Joined
Oct 21, 2006
Messages
47,999
Reaction score
32,144
Location
Edmonton/Sherwood Park
Website
www.bumpertobumper.ca
Oil prices surged Monday, capping their biggest three-day gain in 25 years, as the Organization of Petroleum Exporting Countries suggested it may be ready to scale back output and the government cut its estimates of U.S. oil production.
OPEC said in an article that it "stands ready to talk to all other producers" to achieve "fair and reasonable prices." In its monthly OPEC Bulletin, the cartel added, "But this has to be a level playing field. OPEC will protect its own interests."
Though the article, headlined "Cooperation holds the key to oil's future," does not spell out how the discussion would go, the focus would clearly be on how to moderate production levels in a way to drive up prices, which fell below $40 a barrel this month.
As word spread that OPEC is ready to deal, oil prices rebounded Monday. U.S. crude prices rose $3.98, almost 9%, to settle at $49.20 a barrel in New York. Prices are up 28% since Thursday. Bloomberg says it was the biggest three-day gain in 25 years. Brent crude, the international standard, was up $3.61 to $53.60.
A sustained rise in oil prices could prop up gasoline prices, which are expected to fall in coming months after the end of the summer driving season and current refinery maintenance that has limited supplies.

USA TODAY
Oil prices surge another 6% to over $45 a barrel





Independent oil analyst Philip Verleger says the article doesn't reflect Saudi Arabia's plans to pump oil at full throttle. The country, he says, can make a profit as long as oil is above its costs of $3 to $5 a barrel, and it's intent on driving some producers — in Canada, Venezuela or the USA — out of business. "OPEC is irrelevant," he says.
A bigger factor in the price jump, he says, is that the Energy Information Administration trimmed its estimate of U.S. production from January to May by 40,000 to 130,000 barrels per day. It cut its estimate of June output by 100,000 barrels a day.
"We're producing a lot less oil than we thought we were," Verleger says. He says Monday's report corroborates suspicions that the government has overstated U.S. output even as producers have shut down drilling rigs this year amid falling prices.
After peaking at 9.5 million barrels a day in April, research firm Genscape says, U.S. output is poised to fall to 8.6 million barrels per day by July 2016.

USA TODAY
Oil prices fall below $40 a barrel for first time since 2009





Tom Kloza, chief global analyst at the Oil Price Information Service, says Monday's gains were probably driven in part by traders looking to hedge their previous bets on falling prices. "This does not mean this is a new bull market for oil," he says, noting supplies remain abundant while global demand has weakened.
Even as oil prices have fallen in the short run, OPEC is looking to factors that might push them higher in the future. It is betting that lower prices are going to encourage consumers around the world to use more oil, as happened when an oil price bust and subsequent lower gasoline prices coaxed many Americans into buying SUVs and more fuel-thirsty vehicles in the 1990s. In recent years, consumers in emerging nations have been buying their first cars, boosting demand for oil.
Indeed, OPEC says its projections show that world oil demand will rise 1.38 million barrels a day this year compared with 2014 to 92.7 million barrels a day, mostly because of higher demand in the resurgent economies of the USA and Europe. In 2016, it says demand will increase an additional 1.34 million barrels a day.
That may not be enough to keep pace with abundant supplies. The emergence of the USA as a major player when it comes to oil production again and tough mandates on fuel economy of U.S. vehicles to curb greenhouse gases — no matter the price of gas — are factors that complicate matters for OPEC when it comes to encouraging higher prices.
 

Bogger

Bogger of the GBCA
Joined
Feb 21, 2007
Messages
24,413
Reaction score
18,488
Location
Down by the Bay
short lived.... It's back down to $45.95 (-6.61%) on the day so far.
 
Top Bottom