Posted on 02/10/2016 10:58:26 AM PST by bananaman22
An OPEC production cut is unlikely until U.S. production declines by about another million barrels per day (mmbpd). OPEC won’t cut because it would accomplish nothing beyond a short-term increase in price. Carefully placed comments by OPEC and Russian oil ministers about the possibility of production cuts achieve almost the same price increase as an actual cut.
(Excerpt) Read more at oilprice.com ...
Production cuts may be forced by lack of storage.
It does not matter when OPEC chooses to cut production. American production will ramp up very quickly to meet any rising price caused by OPEC cuts. The toothpaste cannot be pushed back into the tube. An OPEC cut would occasion a short term rise in price that would then reach a lower than desired ceiling and then slowly decline from there as the technology of oil recovery continues to get cheaper to implement. Right now that point is probably between 40 and 60 dollars and may be closer to 40 than 60. The longer the Sauds wait to raise the price of oil the lower will be the ceiling they cannot breach and the sooner they will be back below $40.
That, of course depends on the USA not shutting off production of fossil fuels altogether which it will do if Bernie Sanders becomes President in which case the price of oil does not matter to Americans who will be facing famine.
Sure!
Oil at 27.62 now and it’s OK with me.
It is a complex presentation that leaves out important information, at least in an easily accessible way.
Saudi cash reserves are talked about, but not Saudi expenses.
No brainer for OPEC. As long as production costs are below sale price, pump away. It’s the more expensive oil that will be turned off first.
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