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OPEC magazine op-ed that fueled oil rally baffles insiders

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015. An OPEC publication written by the exporter group’s public relations team helped oil prices jump and prompted speculation over a possible shift in output policy – to the bafflement of some OPEC insiders. The commentary on Monday in the OPEC Bulletin, a magazine issued by OPEC’s Vienna headquarters, said downward pressure on prices due to higher production "remains a cause for concern" and OPEC "stands ready to talk to all other producers". While the 799-word article helped add another 8 percent to oil’s three-day surge, by Tuesday it seemed clear there was no sign of a significant shift in OPEC policy or any indication of a fresh push to shore up markets, analysts and OPEC insiders said. A Gulf delegate said the Bulletin reflected genuine concern in […]

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Opinion: OPEC Divorce And Self-Destruction Thanks To Saudi Oil Strategy?

by Dalan McEndree for Oilprice.com “If you are the world’s leading energy economy, you produce energy, that’s what you do.” The first quote modifies a GEICO commercial describing a free-range chicken (If you’re a free range chicken, you roam free, that’s what you do), the second, the famous John Maynard Keynes quote about markets (The market can stay irrational longer than you can stay solvent), the third, another famous Keynes quote (In the long run, we’re all dead). Together, the three quotes provide a framework for analyzing Saudi options heading into the December 4 OPEC meeting in Vienna and its choices vis-à-vis the OPEC outsiders (all members but Saudi Arabia and its Gulf Arab allies, Kuwait, UAE, Qatar): reconciliation, separation, or divorce . If You’re a Free Range Oil Producer… Despite low oil prices, Saudi Arabia is maintaining its investment in its oil industry. Saudi Aramco Chairman Khalid Al-Falih […]

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Exclusive: Arab OPEC producers brace for oil-price weakness for rest of 2015

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015. A second oil price rout of 2015 has forced Arab OPEC members to cut their price expectations for this year, showing they are prepared to tolerate cheaper crude for longer to defend market share and curb rivals’ output. OPEC delegates, including those from core Gulf OPEC countries, see economic troubles in top energy consumer China as short term and unlikely to have much impact on demand for crude which will rise seasonally in the fourth quarter. But they also believe it will take more than just a few months for weak oil prices, which fell to a more than six-year low near $42 on Monday, to reduce supplies from higher-cost producers such as U.S. shale and stimulate demand. They expect the recent price drop will help reduce […]

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For OPEC, This Year’s Painful Oil Slump Will Bring Gains in 2016

While OPEC’s fight to snatch market share from rival oil producers might look like a costly failure as prices languish below $50 a barrel, an entirely different picture could emerge next year. Supplies outside OPEC are expected to contract in 2016 for the first time since 2008, sliding by 200,000 barrels a day, according to the International Energy Agency. With consumption set to grow by 1.4 million barrels a day, OPEC and its de facto leader Saudi Arabia could seize the chance to broaden their market as competitors damaged by the price slump fall off. “To declare their policy a failure is a pretty big leap,” said Greg Sharenow, who manages $15 billion as executive vice president of Pacific Investment Management Co. “I don’t think you could view Saudi and OPEC’s business plan and model as being a six- or 12-month view. In the long-run, what you’re going to […]

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Venezuela Asks OPEC for Emergency Meeting on Oil Prices

Hard-hit Venezuela has been contacting other OPEC members to push for an emergency meeting in coordination with Russia to come up with a strategy to stop the current oil price rout, people familiar with the matter said. According to these people, Venezuela has been in touch with some members of the Organization of the Petroleum Exporting Countries, including Qatar’s oil minister and president of the OPEC conference, Mohammed al-Sada, to try again to find common ground to defend crude prices. “Venezuela is genuinely concerned that if no action is taken prices are going to drop further,” an OPEC delegate said. “They also understand that OPEC alone cannot help much and there is a need for cooperation with producers outside OPEC, mainly Russia,” the delegate said. A representative of Venezuela couldn’t be immediately reached for comment. Russia has previously sought closer ties to OPEC, but has signaled that it won’t […]

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Iran says some in OPEC do not want high oil price

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015. Iran’s Oil Minister Bijan Zanganeh blamed the latest drop in oil prices on some members of OPEC and questioned whether any OPEC emergency meeting would reach an agreement, the oil ministry’s news agency Shana reported. "To balance the oil price… OPEC members should balance their production. An emergency meeting has been requested and we don’t have a problem with that," Shana cited Zanganeh as saying. "But as you know the result of OPEC meetings should be approved by all members, I think some members do not want the price of oil to be high and they want to damage other countries by low prices." Zanganeh, said on Sunday that holding an emergency OPEC meeting may be "effective" in stabilizing the oil price. Algeria said earlier this month […]

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OPEC’s ‘Fragile Five’ Face Rising Cost in the Fight for Oil Market Share

The costs of OPEC’s plan to protect members’ share of the oil market by out-producing rivals are mounting. As oil prices slump to six-year lows, the risks of worsening political turmoil are rising in the organization’s most vulnerable nations. This includes Algeria, Iraq, Libya, Nigeria and Venezuela, a group dubbed the ‘Fragile Five’ by RBC Capital Markets Ltd. The pain doesn’t end there. With even Saudi Arabia facing its biggest budget deficit in almost three decades, consultant Petromatrix GmbH says the plan to produce at full throttle was a “strategic mistake.” Oil prices slumped to near $40 a barrel in New York on Aug. 14 as a global surplus endures almost nine months after the Organization of Petroleum Exporting Countries unveiled its plan to squeeze rivals led by U.S. shale drillers. American production has stubbornly refused to buckle. This chart shows how the budget position of Saudi Arabia and […]

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OPEC May Boost Oil Output to Record With Iran Back Amid Glut

(Bloomberg) — OPEC could potentially boost crude oil production to 33 million barrels a day, the most ever, after international sanctions are removed against Iran amid a global supply glut, according to the country’s OPEC representative. The global oil market is already in surplus by about 3 million barrels a day, with Saudi Arabia and Iraq responsible for OPEC’s oversupply in the past six months, Iran’s state-run Islamic Republic News Agency reported Sunday, citing Mehdi Asali. Iran can boost output by 500,000 barrels a day within one week after sanctions are lifted, Oil Minister Bijan Namdar Zanganeh said earlier this month. Crude has lost half its value in the past year as U.S. production jumped to the highest level in more than 40 years and Saudi Arabia had record output. Prices collapsed after the Organization of Petroleum Exporting Countries decided on Nov. 27 to maintain production rather than sacrifice […]

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Algeria Calls for Non-OPEC Output Cut to Stop Oil Price Slump

The Organization of Petroleum Exporting Countries can do little to halt the oil price decline on its own and needs producers from outside the group to help in reducing global supplies, Algeria’s Energy Minister said. “A supply reduction by OPEC alone cannot really guarantee a return to oil market stability,” Salah Khebri said at an event in Algiers, according to Liberte newspaper. As the 12-member group of crude producing nations accounts for 40 percent of the world’s supply, “there should be steps taken within OPEC and with non-OPECs.” Khebri called earlier this month for an OPEC emergency meeting because of the continued decline in oil prices, which dropped by half from a year ago amid rising production from the U.S. Oil and gas sales account for about 60 percent of Algeria’s budget revenue and 95 percent of its export income, according to the International Monetary Fund. Algeria’s initiative to […]

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IEA: Long, circuitous rebalancing of oil market begins

In its August Oil Market Report the International Energy Agency’s forecast shows stronger-than-anticipated global oil demand and non-OPEC supply growth swinging into contraction next year. A rebalancing has clearly begun, IEA said. However, the process is likely to be prolonged as a supply overhang is expected to persist through 2016—suggesting global inventories will pile up further, the agency noted. Demand IEA forecasts global oil demand to grow 1.6 million b/d in 2015, 300,000 b/d above last month’s report and averaging 94.2 million b/d, as economic growth solidifies and consumers response to lower oil prices . “This represents the biggest growth spurt in 5 years and a dramatic uptick on a demand increase of just [700,000] b/d in 2014,” IEA said. IEA’s latest 2016 forecast also rises 400,000 b/d to 95.6 million b/d—an above-trend 1.4 million b/d gain—on higher baseline numbers and expectations of a more robust economy. The second-quarter […]

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