How Saudi Arabia Will Manage the Oil Market in 2017

Robert Boslego - INO.com Contributor - Energies


OPEC agreed in Algeria to limit future oil production. This represents a major shift in the policy announced in November 2014 to compete for market share through lower prices.

The OPEC communique stated the group will retain output to a "target range of 32.5 to 33.0 million barrels per day" (mmbd). In the latest OPEC Monthly Oil Market Report (MOMR), OPEC reported that production average 33.4 mmbd in September. While that is not far above the target range, there are other problems looming on the horizon; several countries—Nigeria, Iran, Iraq, and Libya—all want to restore their output to levels they were at before their supplies were disrupted, and that could push OPEC’s output up to nearly 35 mmbd if they succeed.

Saudi Energy Minister Khalid Al-Falih reversed KSA’s position from last April when it would not freeze output without Iran’s agreement to do the same. Instead, he said, Iran, Nigeria and Libya would be allowed to produce "at maximum levels that make sense as part of any output limits which could be set as early as the next OPEC meeting in November."

My interpretation is that Saudi Arabia and the smaller Gulf producers are therefore going to have to absorb the cuts if they intend to achieve the target. Continue reading "How Saudi Arabia Will Manage the Oil Market in 2017"

3 ETF's To Buy If You Think Oil Will Continue To Rise Following OPEC's Decision

Matt Thalman - INO.com Contributor - ETFs


Last week the Organization of the Petroleum Exporting Countries or OPEC announced that the group had to come an "agreement" to reduce oil production. The new deal slated to cut production from an estimated 33.2 million barrels per day down to 32.5 million barrels per day.

While some Wall Street analysts don't believe the production reduction will actually happen, the fact remains that since OPEC made the announcement, the price of oil is up rather dramatically. Prior to the announcement oil was trading around the $44.50 range and has since jumped to the $50 range.

Many investors are looking at the price of oil and wondering how they can get a piece of this action. Let's take a look at three Exchange Traded Funds you can buy if you believe oil prices will continue to increase. Continue reading "3 ETF's To Buy If You Think Oil Will Continue To Rise Following OPEC's Decision"

OPEC's Algiers Meeting

Robert Boslego - INO.com Contributor - Energies


If you are having trouble keeping up with all of the rhetoric in the oil market over the past two months, you are not alone. That’s the oil producers’ basic idea, create as much uncertainty as possible in a bid to scare traders from shorting oil, thereby preventing oil prices from cratering.

Lead-Up to Algiers

Oil prices bottomed in mid-February, following the slide that had begun in June 2014. The trigger was a meeting between energy ministers from Saudi Arabia and Russia, along with a couple of smaller OPEC Gulf producers. They could not agree to a production cut, so they came up with a “freeze” proposal, whereby producers would agree not to increase production further.

Although this would not take one barrel of production out of the market, it was enough to spook traders who had large short positions to cover (buy). Random statements by producers created price spikes, and the resulting “headline risk” cause short sellers to progressively cover more and more positions. The effect was a sizable price rise. Continue reading "OPEC's Algiers Meeting"

Will OPEC Be Turkeys Again?

Adam Feik - INO.com Contributor - Energies


Last year, while we Americans were busy overindulging on turkey and all the fixings, OPEC ministers pulled a fast one on us. While we innocently watched football and took naps, the price of WTI crude plummeted from $74 to $68 in response to OPEC’s announcement it would leave its oil production target unchanged at 30 million barrels per day (mb/d).

Until that weekend, oil in the $60s or $70s seemed unsustainably low.

Of course, even before OPEC’s big Turkey Day declaration, oil had already fallen about 30% from its June highs of $107, due to burgeoning supplies. But the summer swoon turned out to be just the warmup for the rest of oil’s big 17-month collapse (so far). OPEC’s Thanksgiving 2014 meeting sent prices reeling and continued pressures have kept crude near its lows (around $40) even today. Continue reading "Will OPEC Be Turkeys Again?"

The Winner Of The Natural Gas Boom Isn't Who You Think...

By: Jim Nelson of Street Authority

The energy market is officially broken.

That's according to the International Energy Agency (IEA).

On November 10, the group announced that oil prices will remain low for a long time.

Next year, the agency is forecasting a barrel of crude will go for just $60... and only $80 by 2020.

For hundreds of U.S. companies caught up in the shale oil boom over the last decade, that's disastrous news. At $60 a barrel, many oil companies will not generate enough revenue to break even. Continue reading "The Winner Of The Natural Gas Boom Isn't Who You Think..."

Article source: http://www.streetauthority.com/node/30621371