Saudi Oil-Price Cut Upends Market
http://online.wsj.com/articles/saudi-oil-price-cut-upends-market-1415063053
Nov. 3, 2014 8:04 p.m. ET
excepts below:
...An industry official familiar with the move said it wasn’t a decision to undercut shale production, which analysts have frequently suspected to be the motivation for recent Saudi price reductions. Instead, he said the lower pricing was an incentive for refiners in the U.S. to get higher margins by buying more Saudi crude.
“It is about maintaining market share…It is becoming a complex strategy for Saudi Arabia,” said another industry official familiar with the move...
State-owned Saudi Arabia Oil Co. took the same strategy in 2011, raising Asian prices and cutting them in the U.S., said an industry official familiar with the move. At the time, the kingdom was taking advantage of the absence of Libyan oil exports, which had pushed prices higher in Europe and Asia more than in the U.S.
At Denver-based Whiting Petroleum Corp., which is a major company in the Bakken Shale in North Dakota, the company said it has no plans to cut production. Whiting’s shares fell 1.6%.
“Whether there’s oversupply or political threat, we’ve been through this,” said Jack Ekstrom, Whiting’s vice president of corporate and government relations.
Most analysts expect U.S. oil production to keep increasing unless prices fall below about $70 a barrel. Producers that own wells in costly locations or that have high levels of debt are more likely to pull back on investment first, analysts said....
Thanks thackney:
> State-owned Saudi Arabia Oil Co. took the same strategy in 2011, raising Asian prices and cutting them in the U.S., said an industry official familiar with the move. At the time, the kingdom was taking advantage of the absence of Libyan oil exports, which had pushed prices higher in Europe and Asia more than in the U.S.