The Lemon Fool

(yesterday)
https://www.ft.com/content/79a30168-a77 ... 899e8bd9d1
"The kingdom, it seems, is on the back foot.
By agreeing to even engage in such discussions to reverse a pump-at-max strategy of the last two years, some oil industry analysts say Saudi Arabia has already buckled as the oil price plunge creates economic havoc.
the kingdom, which is the world’s largest crude exporter, is among the most oil-dependent nations in the Middle East. It will have to endure the sharpest economic slowdown of the region’s biggest oil producers for years to come, the report said.
The protracted oil price slump has created a ballooning budget deficit and a currency collapse, forcing Saudi Arabia to slash spending, implement austerity measures and raise its international debt to fill a gaping hole in its public finances."

http://www.cnbc.com/2016/11/14/oil-pric ... c-cut.html

Oil prices jump 4 percent on hopes of OPEC output cut

IG Group market strategist Jingyi Pan said market sentiment has been buoyed by reports that key producers including Iran and Iraq were thinking about restraining production.

This may be relevant to the oil price.

http://reneweconomy.com.au/trumps-day-1 ... ies-32467/

US president-elect Donald Trump has confirmed that among his first actions as president will be to “free up” and “fire up” the shale gas and “clean coal”,

Yesterday's jump in the WTI oil price to over $50 was a welcome response to the OPEC agreement to cut production. I sold my holding in Premier OIl, reasoning that it isn't all up from here and there is plenty more volatility to come.

The article in the link below suggests that, going into 2017, a Trump induced global downturn may undo the effect of the supply side cuts and that US shale producers are ready to step up production, having halved their operating costs since 2014

https://www.oilvoice.com/Opinion/307/OP ... or-Impact-

I also have my doubts as to OPEC members willingness actually to implement these cuts. Past history suggests that the temptation to cheat on production limits is just too great.

On the upside, there's the gradual increase in global demand and the chance of production being affected by serious political instability in one or more of the major producers.

I shall continue to hold majors BP/RDSB etc and dip in and out of smaller producers as the OP fluctuates and the mood takes

good luck everybody,
S

US shale producers are ready to step up production, having halved their operating costs since 2014

A big part of any drop in costs over the past 2 years is the fall in drilling, and the large number of rigs lying idle - so costs are at a low. If drilling starts up again to any significant degree costs won't stay halved.

A useful analysis on zerohedge http://www.zerohedge.com/news/2016-11-3 ... n-go-wrong

They tend to the view that over $55-$60/bbl the shale starts becoming economic and this Opec deal is targetting $50-$55 as a result. We'll see.

(still holding overweight in RDSB)

dspp

I don't hold any of the Big Oilies, but I suspect this news is part of the reason my Rotork shares have been on something of a tear recently. There has tended to be quite a correlation between the share price and oil price.

Best wishes


Mark.

"Oil Historically Rallied in the Two years Following OPEC Agreement to Cut Production"

https://pbs.twimg.com/media/CzGC22JVEAAMQVV.jpg

So may be it is different this time due to US shale production and more oil produced from more sources.

Mon Jan 23, 2017
(Oil prices fell about 1 percent on Monday as signs of a strong recovery in U.S. drilling overshadowed news that OPEC and non-OPEC producers were on track to meet output reduction goals.
........

U.S. drillers added the most rigs in nearly four years last week, data from energy services company Baker Hughes showed on Friday, extending an eight-month drilling recovery.)

http://uk.reuters.com/article/us-global ... KKBN15701M

I am beginning to think OPEC maybe giving the shale drillers enough rope to hang themselves. It appears the Americans are now significantly increasing their drilling activities but the small rise in the oil price OPEC wanted will very quickly evaporate because of this drilling and they will have spent all the money and the oil price will be too low to make their work it profitable queue more bankruptcies. Is it a trap to burn the Shale Oilers' fingers to teach them how to behave?

Jimarilo wrote:Oil price creeping up

Trump about to put pressure on Iran, Iran may decide to or just threat to close the Strait of Hormuz, impacting on the OP

Anything can happen with a loose cannon at the helm

P

Indeed his policies are very different from Obama's and he is making massive changes in the way America approaches countries they previously appeased. Trump is all about throwing American weight about and threats. Too many variables now to really see what will happen, as a rough rule of thumb though uncertainty is good for a rising oil price I would say.

"Production from the 11 OPEC members with output targets under the deal has averaged 29.757 million bpd,....

OPEC pledged to reduce output by the 11 countries to 29.804 million bpd. This means production has fallen by more than OPEC said it would and amounts to 104 percent adherence to the supply cut regime, according to an OPEC calculation.

But compliance by OPEC and non-OPEC together is expected to rise in March from February's level of 94 percent, Kuwaiti Oil Minister Essam al-Marzouq said on Monday."

http://www.dailymail.co.uk/wires/reuter ... urces.html

No end in sight for rally on crude oil prices.....

http://www.upi.com/No-end-in-sight-for- ... t=slh&or=1

And if Opec cut oil exports by half?

look wrote:And if Opec cut oil exports by half?

American frackers will increase production.

this "lovely" couple will change the oil market. I expect a very higher oil price for the next months until the Aramco IPO.

http://www.al-monitor.com/pulse/afp/201 ... itics.html

YFB, United States is still a big importer, it imports almost 7 million bpd, I suppose. If the Opec and Russia cut sharply, the shale won't make a difference in the next12 to 24 months, I think. If we read the north american sites, it seems that they are a big exporter. big illusion!

Otherwise, I think the Opec and Russia and its satellites play a big role in the import export market. Perhaps they have "only" 50% to 60% of the production, but they have probably 80% or more of the trade market.

robert wrote:YFB, United States is still a big importer, it imports almost 7 million bpd, I suppose. If the Opec and Russia cut sharply, the shale won't make a difference in the next12 to 24 months, I think. If we read the north american sites, it seems that they are a big exporter. big illusion!

Importer or exporter it does not matter it does not takes them 12 months + to drill a well more like 1 week so they can react fast the only constraint is how much they can produce at this price as not all areas are as productive as the ones they are drilling just now.

I think they can't work so quickly. In one week they don't find money in the banks.
The refineries need to import some oil because of their mix, and United Sttates doesn't have infra structure to export high volumes.

robert wrote:I think they can't work so quickly. In one week they don't find money in the banks.

Read the article below about where the money comes from...

http://oilpro.com/post/31709/wall-stree ... ture_1_txt

Reacting to the crude price blood bath on their screens, dozens of Wall Street research shops are blasting bearish notes to institutional investor clients as we write.

There is a common thread in every one of these notes that we’ve seen. Wall Street analysts blame relentless US tight oil producers and their growth (which is poised to flood the oil markets) for pulling the rug out from under crude.

If you are a producer, you’ve gotta be reading these Wall Street notes thinking “isn’t this what you wanted… for us to grow with your capital and our cost savings and field efficiency gains?”

Anadarko CEO Blames Wall Street For Money Whipping Shale Into A Growth Frenzy

I hold the oil stocks for the dividend yield - but this recent fall has had a significant effect on the value of my portfolio!

but I still may buy some more today on weakness! Anybody else buying?

RDSB yield nearly 7%.