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Russia and 3 OPEC Members Agree to Freeze Oil Output

JANFU

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http://www.nytimes.com/2016/02/17/b...n-region&region=top-news&WT.nav=top-news&_r=0

MOSCOW — In a sign of tentative cooperation among major oil producers, Qatar, Russia, Saudi Arabia and Venezuela announced a plan on Tuesday to freeze output at current levels, a move intended to help bolster energy prices.

The plan, albeit hardly concrete, reflects the troubled state of the oil industry.

With prices having recently slipped to new lows, major oil producers, particularly in the Organization of the Petroleum Exporting Countries, are trying to calm the markets with talk of a deal. But the proposal gives countries a potential out, a big reason oil prices gave up their initial gains on Tuesday.
Only a matter f time. They all all burning thru currency reserves like water poured into the sand.

Now Iran is the wild card, along with Nigeria.
 
unfortunate, the economy was only recovering because such low gas prices allowed consumers to spend more. gas breaks $3 again, there will be another recession.

meanwhile our government's top priority on energy is to make it more expensive. madness.
 
unfortunate, the economy was only recovering because such low gas prices allowed consumers to spend more. gas breaks $3 again, there will be another recession.

meanwhile our government's top priority on energy is to make it more expensive. madness.

The evidence is that consumers were/are not spending their savings on gas.
 
Actually, Russia DOES export other things....Cod, caviar, wheat.


I mean, Russia, ALONE, was able to increase the cost of almost ALL baked goods a few years back, by increasing the price of their grain.

And then, let's not forget, arms. Apart from the US, Russia is the largest arms dealer in the world.

But yeah, I DO agree....the price of oil is not doing them any favors.
 
unfortunate, the economy was only recovering because such low gas prices allowed consumers to spend more. gas breaks $3 again, there will be another recession.

meanwhile our government's top priority on energy is to make it more expensive. madness.

Believe it or not oil production is major part of the economy for some areas, people lose their jobs and have less money counteracting that increase spending. Having a price that producers can make a profit is important to the economy.
 
The evidence is that consumers were/are not spending their savings on gas.

Well, somewhat true.


SUV/truck sales have gone up. And believe me, the price of gas affects those dramatically.
 
Yet oil fell today, and the reason is Iran.

Iran was not even at the discussion, and themselves have suggested they are ready to raise production. We have seen this before where various nations of OPEC do not come to agreement turning some of them into pivot producers. This means controlling price by controlling their own production, problem is those that want to up production are taking advantage of the pivot producers. This happened to Saudi Arabia in the 1980s, and they were not happy about it.

As of today we simply do not have enough of a decision impacting enough of OPEC to change the supply and demand balance. Until it does, the oil route continues. At least for the next couple of settlement months.
 
WTI yawns and drops 1.2%. Brent falls out of bed down 3%

Not one producer not hurting hard from the price. Not one. And Iran a wild card needs to sell oil. If the Saudi can talk with Russia, they can talk with Iran.
Iran is in a hurt locker currency reserves, and their economy is a shambles.
 
Well, somewhat true.


SUV/truck sales have gone up. And believe me, the price of gas affects those dramatically.

The average of cars and trucks is at an all time high. That might influence sales.........
 
The average of cars and trucks is at an all time high. That might influence sales.........

Yes, but their position in relation to passenger cars is right where they always were....at least 10mpg or more less than cars.

My '05 civic, for instance, gets...oh, around 30 mpg, depending on how I drive. Sure, I can "hyper mile" and get upper 30s, like above 35mpg...but average? 30.

My wife's brand spanking new subby forester only gets an average of 20mpg...and 25 if you're REAL careful. Pretty big gap, and sure to be even larger for the newer, better fuel economy cars. My civic is over 10 years old.
 
The Saudi's and Russians do not like each other, and Venezuela is almost bankrupt.

I see this 'agreement' lasting until this coming weekend.
 
The Saudi's and Russians do not like each other, and Venezuela is almost bankrupt.

I see this 'agreement' lasting until this coming weekend.

This is the start, they all need higher revenues.
 
If the price gets a little higher, American oil fields can come back online. I don't mind paying a bit more for American jobs.
 
The Saudi's and Russians do not like each other, and Venezuela is almost bankrupt.

I see this 'agreement' lasting until this coming weekend.

That is just it, this agreement does not do all that much.

All we are talking about here is a production freeze to January levels. We already have suspicions that Saudi Arabia is almost at technical limits (production limits) anyway, and Russia has been on the incline in production output headed up to January. So at January levels production was too high, so much so that demand stays the same question it has been.

Worse, Iran and Iraq both have not agreed to any production level, let alone some freeze. Iran just got to the point of being able to turn up their production. Even if this moves prices upward it should be short-lived, as now the pressure is still on demand relative to price.

This is the 1980s all over again when Saudi Arabia was a pivot producer to control price. If Iran and Iraq both take advantage of the deal then there is zero expectation of a price increase, and if they abide by the deal then Saudi Arabia is back to being a pivot producer where it cannot have high volume production output and higher prices at the same time.

I do not think enough people realize how close we are to a dead period where no one gets what they want with oil, all because demand is off relative to supply.

Which makes perfect sense, looking over the exchanges today I do not see a single contractual put for anytime in 2016 (as in every single settlement date through December) for anything at or above $42 bbl. And I see little in the averages for anytime in 2016 beating $40 bbl on average. Oil from US producers is still in the same condition, where oil is being held for expectations of higher than a half year before contract to put. And we still are inching closer to technical capacity limits because of that trade mentality.

We still have a long way to go in watching various OPEC nations run US and Canada producers out of business.
 
That is just it, this agreement does not do all that much.

All we are talking about here is a production freeze to January levels. We already have suspicions that Saudi Arabia is almost at technical limits (production limits) anyway, and Russia has been on the incline in production output headed up to January. So at January levels production was too high, so much so that demand stays the same question it has been.

Worse, Iran and Iraq both have not agreed to any production level, let alone some freeze. Iran just got to the point of being able to turn up their production. Even if this moves prices upward it should be short-lived, as now the pressure is still on demand relative to price.

This is the 1980s all over again when Saudi Arabia was a pivot producer to control price. If Iran and Iraq both take advantage of the deal then there is zero expectation of a price increase, and if they abide by the deal then Saudi Arabia is back to being a pivot producer where it cannot have high volume production output and higher prices at the same time.

I do not think enough people realize how close we are to a dead period where no one gets what they want with oil, all because demand is off relative to supply.

Which makes perfect sense, looking over the exchanges today I do not see a single contractual put for anytime in 2016 (as in every single settlement date through December) for anything at or above $42 bbl. And I see little in the averages for anytime in 2016 beating $40 bbl on average. Oil from US producers is still in the same condition, where oil is being held for expectations of higher than a half year before contract to put. And we still are inching closer to technical capacity limits because of that trade mentality.

We still have a long way to go in watching various OPEC nations run US and Canada producers out of business.

You just confirmed my theory on why oil prices fluctuate so much. It's not just supply and demand at play. It's also the commodities (petroleum) options market which is what I've been saying to my wife and friends for years, but they wouldn't believe me. (Free market my arse!)

Here's an article I found on USAToday.com that speaks to OPEC's oil deal that might interest readers and put some things in perspective.
 
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