ROME – The account is poisonous. In a couple of weeks, since he is growing expectation for the summit, next Sunday, in Doha should endorse a freeze in production of oil and, therefore, it is said, a raise in prices, the price per barrel rose by $ 5, along with the bustle of the markets. For Saudi Arabia and Russia, which each produce 10 million barrels a day, equivalent to those $ 5 to $ 50 million more receipts per day. In fall, the same goes for all players in the crude oil market. In other words, the wait for the summit has brought, alone, several hundred million dollars to the coffers of each of the oil giants. And, in any event, it prevented that the price falls, emptying them further. To pay, so far, were the operators who are eager to be able to bet on a recovery in prices and those, much more numerous, who, having pointed, however, in recent weeks, on the low crude oil prices, they hurry now to move in the opposite direction, see never really came out of Doha agreement.
the problem is that the assumption that the Doha summit gives birth to a significant agreement and, even more, that that agreement will be fodder upwards oil prices is very uncertain and the same protagonists in Riyadh as in Moscow, they wanted to or not manipulate markets, they know. At the base, there is a reality that no one disputes: the price of oil collapses because it produces too much. The supply exceeds demand by 1-2 million barrels per day. To balance the market, should that manufacturers cut off the production precisely by 1-2 million barrels. But nobody’s going to do it. Much less the OPEC members, most major producers outside the cartel – from Russia, Mexico, Norway – who will meet Sunday around to the Doha table. Everyone’s always talked only to “freeze” the production to the levels of January. But in early 2016, the big producers like Saudi Arabia and Russia were already at record levels of production and had already stated that it did not intend to increase them. Therefore, Riyadh and Moscow will not be divested by anything. In addition, there is the Iran problem. Just out of the trap of sanctions, Tehran has made it known that he intended to recover its previous level of production, or download on the market 1 million barrels more than now. To “freeze” truly global production, Riyadh, Moscow and others should cut their own to make way for Iran. Nobody today believes that this can happen. So, if Doha was only announced a production freeze, the imbalance by 1-2 million barrels remain, indeed would worsen with the gradual arrival of Iranian crude.
Markets volatile and nervous as those of materials raw react, in all probability, a positive agreement, historic, because unpublished, between OPEC and its major competitors for a “no increase” at the pumps. At a minimum, I would interpret as the start of a coordination that could bear fruit in the future. But the reality of the supply-demand imbalance would resume soon over. This means that the price of oil is expected to fall again, as some predict? Probably not. And ‘in fact possible that the oil has touched down, at least for the moment, the fund. But the Doha summit has little to do. The point is that the drop in prices has also brought down the investments and the search for new wells. Therefore, in the coming months, the offer is expected to fall, approaching the levels of demand. Even faster should act the collapse of the new American producers.
By launching the price war, a year and a half ago, the Saudis were aimed at putting out of business the producers who were flooding the US with the extracted oil to new fracking drilling techniques. They put more than expected, but we are succeeding. Cowboys of shale are doing mass bankruptcy or, at current prices, prefer not pump. The record production of the United States in recent years is expected to drop in the coming months, of 7-900 thousand barrels per day. Enough to cushion the return on Iranian market? And, anyway, what will happen to the question? Economic crisis and new patterns of consumption are loosening the hunger of the world’s oil. Even OPEC expects a moderate increase (slightly more than one million barrels per day) in demand for 2016.
The concerns of major oil companies that are coming to Doha, however, does not end there. If the balance between supply and demand in the coming months, really bring the price per barrel at least to 50 dollars What will the cowboys of fracking? At that price, many of the new wells could be competitive again, start again the black gold flowing from Texas or North Dakota and all risk of starting over.
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