Posted on 08/27/2015 12:54:40 PM PDT by abb
U.S. oil prices soared 10% on Thursday, as a rally in Chinese and U.S. stocks and better-than-expected U.S. economic data prompted a rush by traders to bail out of bearish bets that the market would fall.
Traders and analysts at hedge funds, banks and brokerages said supply-and-demand conditions in the oil market remained weak and there appeared to be little fundamental justification for such a strong rally, or expectations of more price gains in the near future. Rather, they said, it appeared to be set off as investors with so-called short positions that profit from falling prices closed those bets out as the market turned against them.
Investors have been getting increasingly bearish on crude amid surging global supply and new questions about demand from China, the world’s second-largest oil consumer, amid slowing economic growth, a slumping stock market and a move by its central government to devalue its currency.
Bets by financial investors in the market that oil prices will fall were at their highest level since early April, according to the most recent data last week from the U.S. Commodity Futures Trading Commission.
Investors who added to bearish bets recently as the market fell to new lows are the quickest to bail out when prices recover.
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(Excerpt) Read more at wsj.com ...
ping
Probably be $1.50 more at the pump today.
Yeah, they got a lot of catching up to do since they have fallen about 25 cents in the last 8 months....
http://www.wsj.com/articles/venezuela-asks-opec-for-emergency-meeting-on-oil-prices-1440699480
Venezuela Asks OPEC for Emergency Meeting on Oil Prices
Venezuela asks OPEC to consider coordination with Russia over falling oil prices
By Summer Said And Benoît Faucon
Updated Aug. 27, 2015 2:24 p.m. ET
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.
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Venezuela is really hurting.
I don’t think Saudi Arabia cares.
Early on Saudi made a few talks about not wanting to subsidize other governments overspending by themselves making production cuts.
Gas at your pump up 15% tomorrow.
All of this based on that fake phony 3.7% Q2 growth number the Obama Administration put out yesterday.
The entire world economy is a sham.
This price has put a severe dent in all the OPEC member treasuries. IIRC, the Saudis are having to raid the savings account. Also, the Tuesday market downdraft at the close was rumored to be some government liquidating equities. May have been an opecker.
So they’re all feeling the pinch, as is our oil patch.
What do you use for money? Where does it come from?
It will take much cheaper oil for Saudi Arabia to take action
http://www.economist.com/news/finance-economics/21662570-kingdom-can-stand-more-pain-it-will-take-much-cheaper-oil-saudi-arabia-take-action
THERE comes a time when any self-respecting cartel boss has to focus on protecting his turf. Saudi Arabia has spent the past nine months fighting to safeguard its share of the global oil market, increasing its own crude production to record highs. That exasperates its weaker OPEC partners. It also seems utterly self-defeating, especially after world oil prices plunged below $45 a barrel on August 24th, a six-and-a half year low. Some say its folly is attempting to fight an unwinnable war against American “frackers”. But its eye may be more on local Shia-led rivals, Iraq and Iran.
On August 23rd OPEC-member Iran echoed the frustrations previously aired by Algeria and said it would welcome—or “not disagree with”—an emergency meeting of the producers’ cartel to shore up prices. Yet two days later Bijan Zanganeh, its oil minister, outlined plans, once nuclear-related sanctions are lifted, to eventually add 1m barrels a day (b/d) to production, reclaiming lost market share. (He also said investment had shrunk to almost nothing, so it was not clear how Iran would achieve this.) Iraq, too, is pumping hard to make up for production lost during years of sectarian conflict. The Paris-based International Energy Agency says Iraqi crude output has jumped by 740,000 b/d in the course of this year, a much larger proportional increase than Saudi Arabia’s...
It is likely to be pragmatic. The drop this year has rendered high-cost production, such as Brazilian deep-water fields and Canadian tar sands, less profitable, much as it had hoped; overall non-OPEC output growth is slowing. It may believe that the next leg down in the oil price will hurt America’s shale industry, though it clearly underestimated the cost-cutting potential in hydraulic fracturing (fracking). Mr Stevens says that for the first time since the late 1920s the oil market is being left to find its own floor—though no one knows where it is. As Al Capone, a cartel boss of that era, would have put it: “My rackets are run on strictly American lines and they’re going to stay that way.”
My brother called me cursing the other day because gas prices the last time oil was this cheap were 40 cents less than they are now here in NYC/USSR
How does that math work? Great to be them.
I know, right?
Ecuador Reveals Pain Inside OPEC: It’s Pumping Oil at a Loss
http://www.bloomberg.com/news/articles/2015-08-26/ecuador-reveals-the-pain-inside-opec-it-s-pumping-oil-at-a-loss
Ecuador has revealed the financial stress inside OPEC created by low oil prices, becoming the first member of the group to say it’s pumping at a loss.
President Rafael Correa said on Tuesday that the South American nation is receiving as little as $30 a barrel for its crude, while production costs average about $39. The warning comes after several other members of the Organization of Petroleum Exporting Countries, including Algeria and Libya, said the group should consider holding an emergency meeting to respond to the drop in oil prices.
Weekly oil-rig count edges higher, but total rig count falls: Baker Hughes
Published: Aug 28, 2015 1:11 p.m. ET
http://gis.bakerhughesdirect.com/Reports/StandardReport.aspx
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