Oil slides on Saudi comments..OPEC doubts it can live with US shale
Oil prices tumbled 4 percent on Tuesday after Saudi Oil Minister Ali Al-Naimi ruled out production cuts, and extended losses after settlement when a U.S. industry trade group API said domestic crude stockpiles swelled by more than twice what analysts had expected.
Crude slid as Al-Naimi, at a conference in Houston, restated the kingdom’s rationale for maintaining output was that demand would absorb excess crude that has crushed prices over the past 20 months.
Big oil exporters Saudi Arabia and Russia have proposed to freeze output at January levels, which were near record highs, but only if other producers also do the same.
More meetings on the potential freezes will be held in March, al-Naimi told the IHS CERAweek conference in Houston.
An estimated 1 million to 2 million barrels of oil are being produced daily in excess of demand, and analysts and traders remained skeptical that the freeze will erase the big global supply glut.
Benchmark Brent crude futures LCOc1 settled down $1.42, or 4 percent, at $33.27 a barrel, while U.S. crude futures CLc1 fell $1.52, or 4.6 percent, to $31.87 a barrel.
The American Petroleum Institute (API) said crude inventories rose 7.1 million barrels in the week to Feb. 19 to 506.2 million, far exceeding analysts’ expectations for an increase of 3.4 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 307,000 barrels, API said. The U.S. Energy Information Administration will report official inventory data on Wednesday morning. [EIA/S]
After the API report, Brent sank further to $32.92 at 4:47 EST, and U.S. crude fell to $31.30 a barrel.
“Saudi Arabia is going to continue pumping – that’s the bottom line,” said Tariq Zahir, managing member of Tyche Capital Advisors in Laurel Hollow, New York. “The level of trust is not there to implement cuts.”.
“If they freeze production at January levels when you’re already oversupplied by around a million barrels per day it just prolongs that situation of oversupply,” said Energy Aspects analyst Dominic Haywood.
“Shale oil in the United States, I don’t know how we are going to live together,” said OPEC Secretary General Abdalla Salem el-Badri, speaking at the IHS Energy CERAWeek conference.
“I talk to the EU, I talk to the Russians, I talk to the Chinese, I talk almost to everybody except the United States — what I want is a dialogue…The United States wants to export, but at the same time they import and store. This is something that I don’t know how we’re going to tackle,” he said.
According to el-Badri, the cartel has never worked with oil producers that respond to shifts in prices so quickly. “Any increase in price, shale will come immediately and cover any reduction,” he said.
The International Energy Agency reported on Monday that US shale oil is still very far from being ousted from the market. While production is projected to go down by 600,000 barrels per day (bpd) this year and a further 200,000 bpd next year, it is expected to increase again in 2018.
“Anybody who believes that we have seen the last of rising” US shale oil production “should think again,” the IEA said in a report, quoted by Bloomberg.
“Shale oil in the United States, I don’t know how we are going to live together,” said OPEC Secretary General Abdalla Salem el-Badri, speaking at the IHS Energy CERAWeek conference.”
thats exactly what we have been saying..they will take the whole industry out before they cut production..its a war..
“Oil prices tumbled 4 percent on Tuesday after Saudi Oil Minister Ali Al-Naimi ruled out production cuts, and extended losses after settlement when a U.S. industry trade group API said domestic crude stockpiles swelled by more than twice what analysts had expected.”