Post by jeffolie on Jun 8, 2011 11:40:49 GMT -6
Oil jumped, OPEC meeting failed, Saudis like China
West Texas Intermediate oil aka WTI peaked recently about $117 fell to about $93. WTI oil gluts the Cushing facility and margin increases resulted in the decline...but oil is now above $100 because the Saudis want it and OPEC lost control.
America imports from Saudi Arabia are less important now to the Saudis.
China increasingly became the Saudis goto buyer.
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OPEC Talks Break Down, No Deal to Lift Oil Supply www.cnbc.com/id/43324926
"...OPEC talks broke down in acrimony on Wednesday after Saudi Arabia failed to convince the cartel to lift production, sparking a rebound in global oil prices.
"...OPEC's Vienna secretariat sees demand in the second half of the year 1.7 million bpd higher than current cartel output....'
=======================================================================================
The Implications of OPEC's Failed Meeting
For thirty years Saudi Arabia was able to do two things:
1. Have their Kings and Princes sucked off by successive administrations in the United States.
2. In return, control the amount and thus price of oil on the world market.
That ended today.
The implications of this were a short term immediate spike in the price of oil, as a lot of people were short and expecting Saudi Arabia to "announce" (after twisting everyone's arm) that production would go up.
But this short-term reaction, while important, isn't the big problem. The big problem is that OPEC has been neutered, and the US Government's effective "back door" control over OPEC's production via bribery and mutual fellatio with the Saudi Royal Family has, at least temporarily, ended.
Cartel behavior is, over the long term, inherently unstable. The reason for this is the fact that eventually someone finds a good business reason to defect from the cartel and by doing so gains a competitive advantage. It is thus only with some sort of enforcement mechanism that cartel behavior can be maintained for any length of time. We did it with 30 years of "support" for Saudi Arabia, officially and otherwise.
Today, that hegemony and control has been cracked. Exactly how badly that crack propagates, and whether it turns into an outright rupture remains to be seen. But this much is certain: The world as it existed in the oil markets up until this morning is different now than it was a few hours ago.
It will be a while before we discern whether this will lead to higher or lower world oil prices. There['s a solid argument for both directions, with the "Peak Oilers" claiming that Saudi and others can't increase production while the free market folks will of course look at freedom of individual action as leading to lower prices. You could give me either position to argue in a debate and I could easily do it.
But this much is certain: The world is changing, and our control over the actions of OPEC via Saudi Arabia is waning, if it hasn't completely collapsed this morning. And if the latter is the case the implications go far beyond the price of a barrel of oil, as Saudi Arabia is a brutally repressive nation that has utterly depended on the United States for much of its technology and political stability.
A storm is coming my friends...... and it's a bad one.
market-ticker.org/akcs-www?post=187755
========================================================
No More Storage in Cushing: WTI Will Be $90 in a Month
By Dian L. Chu, EconMatters
The latest inventory report came out on Wednesday, March 30 from the U.S. EIA (Energy Information Administration) showing Cushing stocks at a record 41.9 million barrels (Fig. 1). And guess what? The news is only going to get worse for WTI longs, as the next couple of weeks will bring the total storage at Cushing close to the max capacity of 44 million barrels due to the fact that more traders took delivery on WTI (West Texas Intermediate) on the last CL rollover....
www.econmatters.com/2011/03/no-more-storage-in-cushing-wti-will-be.html
West Texas Intermediate oil aka WTI peaked recently about $117 fell to about $93. WTI oil gluts the Cushing facility and margin increases resulted in the decline...but oil is now above $100 because the Saudis want it and OPEC lost control.
America imports from Saudi Arabia are less important now to the Saudis.
China increasingly became the Saudis goto buyer.
================================================
OPEC Talks Break Down, No Deal to Lift Oil Supply www.cnbc.com/id/43324926
"...OPEC talks broke down in acrimony on Wednesday after Saudi Arabia failed to convince the cartel to lift production, sparking a rebound in global oil prices.
"...OPEC's Vienna secretariat sees demand in the second half of the year 1.7 million bpd higher than current cartel output....'
=======================================================================================
The Implications of OPEC's Failed Meeting
For thirty years Saudi Arabia was able to do two things:
1. Have their Kings and Princes sucked off by successive administrations in the United States.
2. In return, control the amount and thus price of oil on the world market.
That ended today.
The implications of this were a short term immediate spike in the price of oil, as a lot of people were short and expecting Saudi Arabia to "announce" (after twisting everyone's arm) that production would go up.
But this short-term reaction, while important, isn't the big problem. The big problem is that OPEC has been neutered, and the US Government's effective "back door" control over OPEC's production via bribery and mutual fellatio with the Saudi Royal Family has, at least temporarily, ended.
Cartel behavior is, over the long term, inherently unstable. The reason for this is the fact that eventually someone finds a good business reason to defect from the cartel and by doing so gains a competitive advantage. It is thus only with some sort of enforcement mechanism that cartel behavior can be maintained for any length of time. We did it with 30 years of "support" for Saudi Arabia, officially and otherwise.
Today, that hegemony and control has been cracked. Exactly how badly that crack propagates, and whether it turns into an outright rupture remains to be seen. But this much is certain: The world as it existed in the oil markets up until this morning is different now than it was a few hours ago.
It will be a while before we discern whether this will lead to higher or lower world oil prices. There['s a solid argument for both directions, with the "Peak Oilers" claiming that Saudi and others can't increase production while the free market folks will of course look at freedom of individual action as leading to lower prices. You could give me either position to argue in a debate and I could easily do it.
But this much is certain: The world is changing, and our control over the actions of OPEC via Saudi Arabia is waning, if it hasn't completely collapsed this morning. And if the latter is the case the implications go far beyond the price of a barrel of oil, as Saudi Arabia is a brutally repressive nation that has utterly depended on the United States for much of its technology and political stability.
A storm is coming my friends...... and it's a bad one.
market-ticker.org/akcs-www?post=187755
========================================================
No More Storage in Cushing: WTI Will Be $90 in a Month
By Dian L. Chu, EconMatters
The latest inventory report came out on Wednesday, March 30 from the U.S. EIA (Energy Information Administration) showing Cushing stocks at a record 41.9 million barrels (Fig. 1). And guess what? The news is only going to get worse for WTI longs, as the next couple of weeks will bring the total storage at Cushing close to the max capacity of 44 million barrels due to the fact that more traders took delivery on WTI (West Texas Intermediate) on the last CL rollover....
www.econmatters.com/2011/03/no-more-storage-in-cushing-wti-will-be.html