Just as we warned previously, it appears Russia is spoiling the oil-rally party. IFX reports that Russia’s envoy has stated that they are “against oil output cuts.” Furthermore, seemingly confirming no ‘cut’, Venezuela’s Pino says “freeze” deal may only be temporary. So freeze at best (at record levels) and no cut..
$50 defended again..
As ForexLive notes, Venezuelan and Russian oil ministers met in Moscow today and suggested non-OPEC countries remove 400-500K of supply to supplement OPEC quotas. The initial reaction from Moscow suggests the proposal didn’t get far. It’s shaping up like the best realistic deal is for some non-OPEC and OPEC countries to freeze output but expect the quotas to be routinely violated.
As we noted before, for all the confused oil bulls (and algos), here is an
attempt at laying out the odds of an OPEC production cut from the
perspective of 4 key producers.
- Nigeria National Petroleum Corp. lowered by at least $1 a barrel its official selling prices, or OSPs, for 20 out of 26 oil grades,
according to pricing lists. Qua Iboe, Nigeria’s largest export crude
under normal circumstances, was reduced by the most since 2014. The price reductions are due to a “huge cargo overhang” as the country attempts to regain market share, Mele
Kyari, group general manager for the oil-marketing division at NNPC,
the state oil company, said by phone. (Source: Bloomberg, 20 October
2016) - Iran, OPEC’s third-biggest member, plans to boost its oil output to 4 million barrels a day this year, potentially complicating the producer group’s plan to cut supply in an effort to prop up prices.
Oil
Minister Bijan Namdar Zanganeh said he hopes the Organization of
Petroleum Exporting Countries will agree next month at a meeting in
Vienna to limit output. “We should decide in November how much every
country should produce,” Zanganeh said. He didn’t comment on Iran’s
participation, if any, in the OPEC agreement. - Al-Naimi (Saudi Oil Minister until May 2016) writes in the book that one of his aides asked him in November 2014 what was the chance of leading non-OPEC countries Russia, Mexico, Kazakhstan and Norway cutting oil production. “I held up my right hand and made the sign for zero,” he writes. (Source: Bloomberg, 17 October 2016)
- In early October, Sechin told reporters that Rosneft planned this year to raise its oil production, already
the world’s largest among listed producers, above the 203 million
tonnes (4.1 million barrels per day) it produced in 2015. Sechin said he
doubted some OPEC countries, such as Iran, Saudi Arabia and Venezuela,
would cut their output either: “Try to answer this question yourself:
would Iran, Saudi Arabia or Venezuela cut their production?”
Still think an OPEC production cut deal is imminent? Then we have a few bridges in Saudi Arabia for sale to the highest bidder.
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