Posted on 02/02/2017 1:04:27 PM PST by bananaman22
It’s been a month now that investors and analysts have been closely watching two main drivers for oil prices: how OPEC is doing with the supply-cut deal, and how U.S. shale is responding to fifty-plus-dollar oil with rebounding drilling activity. Those two main factors are largely neutralizing each other, and are putting a floor and a cap to a price range of between $50 and $60.
The U.S. rig count has been rising, while OPEC seems unfazed by the resurgence in North American shale activity and is trying to convince the market (and itself) and prove that it would be mostly adhering to the promise to curtail supply in an effort to boost prices and bring markets back to balance. In the next couple of months, official production figures will point to who’s winning this round of the oil wars.
This would be the short-term game between low-cost producers and higher-cost producers.
In the longer run, the latest energy outlook by supermajor BP points to another looming battle for market share, where low-cost producers may try to boost market shares before oil demand peaks.
(Excerpt) Read more at oilprice.com ...
Ping me when it’s time to fill my bathtub with gasoline! ;)
They need to add Trump and his minions to the supply part of the equation. And to the increase in demand in the longer term.
OPEC got too greedy and giddy with the thought of $200 a barrel oil and ran up the price for too long which led to the development of profitable fracking. The genie has been let out and isn’t going back into the bottle. OPEC lost big on its’ bet and finds itself helpless to regain control.
Let’s play Geo-political....
OPEC is made up of nation states that are corrupt, hate each other and cheat their agreement on a regular basis....
The linchpin is Saudi Arabia.......
If the US just slightly destabilizes The House of Saud, they will have to sell more oil to drive up revenue to spread money to their disgruntled populace.....
The result is the remaining OPEC members feel betrayed and will push up their production....
Result...cheap oil....
They key is not to destabilize too much.....
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