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Bisnis.com, JAKARTA – Harga minyak Brent ditutup pada level tertinggi dalam dua tahun terakhir pada perdagangan Kamis, (26/10/2017), mendekati US$60 per barel, setelah Putra Mahkota Arab Saudi mendukung perpanjangan pemotongan output OPEC.
Brent, patokan minyak mentah dunia, untuk kontrak Desember ditutup menguat 1,6% atau 0,86 poin ke level US59,30 per barel, tertinggi sejak Juni 2015, di bursa ICE Futures Europe yang berbasis di London.
Sementara itu, minyak West Texas Intermediate (WTI) untuk pengiriman Desember menguat 0,46 poin ke level US$52,64 per barel di New York Mercantile Exchange, tertinggi sejak April.
Seperti dilansir Bloomberg, Putra Mahkota Saudi, Mohammed bin Salman mengatakan dalam sebuah wawancara bahwa dia ingin kesepakatan pemangkasan produksi OPEC diperpanjang setelah Maret 2018. Komentarnya tersebut sejalan dengan Presiden Vladimir Putin yang mengatakan bahwa Rusia terbuka untuk memperpanjang kesepakatan sampai akhir tahun depan.
“Saudi tetap konsisten dengan keinginannya untuk memperpanjang pengurangan produksi, dan melanjutkan pengurangan bertahap persediaan minyak mentah global,” ungkap Michael Hiley, kepala perdagangan energi LPS Partners, seperti dikutip Bloomberg.
Tanda-tanda bahwa Organisasi Negara-negara Pengekspor Minyak dan sekutu-sekutunya mungkin setuju untuk memperpanjang kesepakatan pengurangan produksi pada pertemuan di Wina akhir bulan depan telah membantu minyak AS bertahan di atas US$50 dan Brent di atas US$55 sepanjang bulan ini.
“Kabar dari OPEC pasti mendukung. Dapat dikatakan bahwa mereka telah mendapatkan kembali kepercayaan pasar. Mereka telah mendapatkan kredibilitas dengan kepatuhan,” kata Phil Flynn, analis pasar senior di Price Futures Group Inc, Kamis (26/10/2017).
“Namun, produsen minyak shale masih akan meningkatkan produksi. Masih ada beberapa keraguan di pasar,” lanjutnya.
Output minyak mentah AS naik paling banyak sejak 2012 pekan lalu karena pengebor minyak shale menuai hasil dari penigkatan pengeboran yang dimulai pada bulan Mei tahun lalu. Walaupun mereka mengurangi jumlah rig minyak akhir-akhir ini, banyak sumur bor belum yang belum beroperasi, yang berarti output masih akan meningkat.
New York beritasatu– Harga minyak dunia naik pada perdagangan Jumat waktu Amerika Serikat atau Sabtu pagi WIB (10/12), karena pasar berharap pertemuan produsen dan produsen non-OPEC akan menyetujui pemangkasan produksi guna memperkuat kesepakatan OPEC guna membatasi produksi.
Para investor saat ini fokus pada pertemuan antara produsen-produsen OPEC dan non-OPEC yang dapat menghasilkan kesepakatan untuk memangkas produksi minyak mentah. Para analis mengatakan tampaknya pasar cukup optimistis tentang hasil mendatang.
OPEC pada 30 November memutuskan untuk memangkas produksi minyaknya sebesar 1,2 juta barel per hari (bph), menetapkan pagu produksi minyak di 32,5 juta barel per hari.
Pengurangan produksi yang berlaku mulai 1 Januari 2017 ini merupakan pemotongan produksi minyak pertama kartel sejak 2008. Pengurangan ini sedang dikoordinasikan dengan negara produsen non-OPEC, Rusia, yang berjanji akan memangkas produksinya 300.000 barel per hari. Namun penguatan dolar AS dan peningkatan jumlah rig pengeboran minyak AS yang beroperasi menahan kenaikan harga minyak lebih lanjut.
Dolar naik terhadap sebagian besar mata uang utama pada Jumat, membuat minyak lebih mahal bagi pembeli yang menggunakan mata uang lainnya.
Sementara pada Jumat, perusahaan jasa minyak AS Baker Hughes melaporkan bahwa jumlah rig minyak yang beroperasi di ladang-ladang AS naik 21 rig menjadi 498 rig, menandai kenaikan keenam minggu berturut-turut.
Patokan AS, minyak mentah light sweet atau West Texas Intermediate (WTI) untuk pengiriman Januari, meningkat US$ 0,66 menjadi US$ 51,50 per barel di New York Mercantile Exchange. Sementara patokan global, minyak mentah Brent North Sea untuk pengiriman Februari, bertambah US$ 0,44 menjadi US$ 54,33 per barel di London ICE Futures Exchange.
/WBP
ANTARA
SEOUL. Minyak mentah pertahankan kenaikan terbesar dalam sembilan bulan setelah OPEC menyetujui pemangkasan pasokan pertama dalam delapan tahun, Kamis (1/12).
Mengacu Bloomberg, minyak West Texas Intermediate (WTI) untuk pengiriman Januari naik sebanyak 68 sen ke US$ 50,12 per barel di New York Mercantile Exchange dan diperdagangkan di US$ 50,09 pada 14:55 siang di Seoul.
Kontrak minyak ini melonjak sebanyak US$ 4,21 menjadi ditutup pada US$ 49,44 per barel pada Rabu kemarin, di mana volume keseluruhan perdagangan di Nymex naik ke rekornya sebesar 2,5 juta kontrak, menurut data CME yang telah diperbarui dan dikumpulkan oleh Bloomberg. Harga naik 5,5 % pada November.
Sedangkan, minyak Brent untuk pengiriman Februari naik sebanyak 72 sen, atau 1,4 %, ke US$ 52,56 per barel di London-based ICE Futures Europe exchange. Kontrak Januari melonjak US$ 4,09, atau 8,8 %, berakhir pada US$ 50,47 per barel di hari Rabu.
OPEC sepakat untuk mengurangi produksi kolektif sebanyak 32,5 juta barel per hari, Menteri Perminyakan Iran Bijan Namdar Zanganeh mengatakan di Wina.
Goldman Sachs Group Inc dan Morgan Stanley mengatakan harga bisa naik sampai US$ 60 per barel.
http://investasi.kontan.co.id/news/minyak-nangkring-di-level-us-50-per-barel
Sumber : KONTAN.CO.ID
New York detik- Harga minyak melonjak lebih dari 10% pada perdagangan Rabu, hingga menembus di atas US$ 50/barel. Ini merupakan kenaikan harian tertinggi di bulan ini. Penyebabnya negara produsen minyak anggota OPEC memutuskan untuk memangkas produksi minyak mereka, untuk pertama kalinya sejak 2008.
Pemangkasan produksi minyak oleh negara anggota Organization of the Petroleum Exporting Countries (OPEC) ini dilakukan untuk mendongkrak harga yang masih rendah.
Dalam sebulan ini, harga minyak tercatat naik hampir 5%. Meski begitu, kenaikan harga minyak ini diprediksi hanyalah sementara saja.
OPEC, yang produksi minyaknya mewakili 1/3 dari produksi minyak dunia, sepakat untuk memangkas produksinya sekitar 1,2 juta barel per hari, atau lebih dari 3%, menjadi 32,5 juta barel per hari. Ini disepakati dalam pertemuan OPEC di Wina, Austria.
Indonesia memutuskan membekukan keanggotaannya di OPEC, karena tidak mau memangkas produksi minyaknya. Lihat di sini.
Arab Saudi sebagai pemimpin OPEC, menyatakan bakal memangkas produksi minyaknya hingga 500.000 barel per hari, menjadi 10,06 juta barel per hari. Kemudian Iran, produsen minyak terbesar kedua di OPEC, juga sepakat memangkas produksi minyaknya 200.000 barel per hari menjadi 4,351 juta barel per hari.
Selain OPEC, Rusia yang juga produsen minyak besar dunia non OPEC, sepakat memangkas produksi minyaknya sebesar 300.000 barel per hari.
Kondisi ini membuat harga minyak langsung naik. Harga kontrak minyak jenis West Texas Intermediate (WTI) untuk pengiriman Januari naik US$ 4,21/barel (9,6%) menjadi US$ 49,44/barel. Sepanjang perdagangan, harga minyak WTI sempat naik 10% lebih.
Harga minyak jenis Brent untuk pengiriman Januari naik US$ 4,09/barel (8,82%0 menjadi US$ 50,47/barel.
“Akan memakan waktu untuk melihat siapa yang akan menghidupkan aturan (pemangkasan produksi) itu,” kata Analis, Oliver Sloup, dilansir dari Reuters, Kamis (1/12/2016).
Kuwait, Venezuela, dan Algeria disebut juga siap menyesuaikan diri dengan kesepakatan pemangkasan produksi oleh OPEC. (wdl/wdl)
SINGAPURA. Harga minyak naik sekitar 1 % pada hari Senin (21/11) karena OPEC mendekati kesepakatan pembatasan produksi untuk mengendalikan pasokan yang telah menekan harga selama lebih dari dua tahun.
Mengutip Reuters, minyak mentah berjangka Brent diperdagangkan pada US$ 47,31 per barel naik 65 sen, atau 0,96 %. Sedangkan, minyak West Texas Intermediate (WTI) naik 0,9 %, atau 41 sen, di US$ 46,10 per barel.
Para pedagang mengatakan pasar tengah mendapatkan sokongan dari rencana negara-negara pengekspor minyak memangkas produksinya.”Minyak mentah akan terus didorong oleh berita pertemuan 30 November mengenai pengurangan produksi,” kata ANZ Bank.
Asal tahu, rencana pemangkasan produksi berulang kali gagal. Beberapa negara produsen minyak, termasuk Iran enggan menyepakati kesepakatan ini.
Namun, kesepakatan ini kian mendekati kenyataan setelah kemungkinan Iran akan diberikan pengecualian. “Saya pikir akan ada semacam kesepakatan pekan depan,” kata Matt Stanley, broker minyak Freight Investor Services.
http://investasi.kontan.co.id/news/minyak-naik-sekitar-1-dipicu-kabar-dari-opec
Sumber : KONTAN.CO.ID
Riyadh, Oct 19, 2016 (AFP)
Saudi Arabia plans to raise up to $17.5 billion from its first international bond issue, Bloomberg News reported on Wednesday, as analysts expect strong buyer interest.
It would make the Saudi issue the largest ever from an emerging-market nation, said Bloomberg News, which cited two people with knowledge of the offer.
The figure exceeds the $15 billion which an analyst had previously told AFP could be the value of the issue.
Saudi Arabia, the world’s largest oil exporter, projected a budget deficit of $87 billion this year after a fall in oil revenues, which still account for most of its income.
To cover the shortfall, Saudi Arabia is re-orienting its economy by imposing unprecedented subsidy cuts, slowing government projects, and in September it chopped cabinet ministers’ salaries, among other measures.
The kingdom last week began meetings with potential investors ahead of the bond issue.
According to the sources cited by Bloomberg News, the kingdom plans to sell dollar-denominated five-year bonds yielding about 140 basis points above US treasuries with similar maturity.
Saudi Arabia will also issue 10-year notes and 30-year securities at a premium, the report said.
It added the proposed pricing is also higher than neighbour Qatar’s bonds which offer a similar maturity.
Christopher Dembik, global head of macroeconomic research at France’s Saxo Bank, told AFP the kingdom’s offer “is going to arouse strong interest on the part of investors”, and could be four or five times oversubscribed.
He said investors are desperately looking for yield, and the Saudi offer “will be certainly slightly above that of its neighbours because of its less favourable sovereign debt rating and a recent global trend towards higher sovereign rates,” he said.
Saudi Arabia has already issued domestic bonds but that has led to a tightening of bank liquidity, according to Patrick Dennis, lead Middle East economist at Oxford Economics in London.
– Helping to fund deficit –
“So that’s the main reason why they’re now borrowing overseas,” he told AFP.
Saudi banks’ loan-to-deposit ratio rose for the fifth consecutive month in August, reaching 90.8 percent, because of faster growth in credit relative to deposits, Riyadh’s Jadwa Investment said in a report this month.
Borrowing abroad also reduces the drain on the kingdom’s foreign reserves, Dennis said.
Official data show those reserves declined to $562 billion in August from $732 billion at the end of 2014.
The reserves remain very large but their rapid drawdown shows a need for diversified funding, Dennis said.
London-based Capital Economics said in a briefing paper that Saudi reserves are now “unlikely to fall much beyond their current level in the coming years” because the bond issue will finance around a third of next year’s budget deficit and almost all of the current account shortfall.
In April the kingdom released its wide-ranging Vision 2030 for diversifying the economy.
At its heart is a plan to float less than five percent of state oil company Saudi Aramco on the stock market.
The proceeds would help form what will become the world’s biggest state investment fund, with around $2 trillion in assets.
With prospects good for the current international bond issue, Dembik foresees Saudi Arabia borrowing $15 billion to $20 billion annually in the market to help finance its economic transformation plan.
NEW YORK kontan. Wall Street tampak sumringah pada transaksi penutupan tadi malam (10/10). Mengutip data CNBC, pada pukul 16.00 waktu New York, indeksDow Jones Industrial Average naik 0,49% menjadi 18.329,04.
Saham ExxonMobil mencatatkan kenaikan tertinggi dan saham Procter & Gamble menjadi saham dengan penurunan terdalam.
Adapun indeks S&P 500 naik 9.92 poin atau 0,46% menjadi 2,163,66. Sektor energi memimpin kenaikan di antara seluruh sektor lainnya.
Sementara, indeks Nasdaq ditutup dengan kenaikan 36,27 poin atau 0,69% menjadi 5.328,67.
Dalam setiap sembilan saham yang naik, terdapat satu saham yang tertekan di New York Stock Exchange. Volume transaksi perdagangan tadi malam melibatkan 669,28 juta saham dan volume transaksi gabungan mencapai 2,817 miliar saham.
Sektor energi memberikan vitamin kuat bagi Wall Street pasca debat calon presiden AS kedua.
“Sebenarnya kondisi di market cukup tenang. Saya rasa pergerakannya masih akan seperti ini hingga ada rilis terbaru mengenai data makro,” jelas Craig Sterling, head of US equity research Pioneer Investment.
Sedangkan Adam Sarhan, CEO Sarhan Capital menambahkan, market mendapatkan sedikit kepastian dari OPEC dan hal inilah yang menjadi faktor bullish bagi pasar saham.
Sekadar informasi, harga kontrak minyak West Texas Intermediate naik 3,1% menjadi US $51,35 per barel. Sedangkan harga minyak Brent menyentuh level tertinggi dalam setahun terakhir.
Pemicunya, Presiden Rusia Vladimir Putin mengatakan bahwa Rusia siap untuk bergabung dalam pemangkasan produksi minyak oleh anggota OPEC.
Putin, saat menyampaikan pidato di kongres energi di Istanbul Turki, mengatakan dirinya berharap anggota OPEC dapat memberikan konfirmasi mengenai keputusan kuota produksi saat organisasi ini menggelar pertemuan pada November mendatang.
the economist: ALONG with bank runs and market crashes, oil shocks have rare power to set monsters loose. Starting with the Arab oil embargo of 1973, people have learnt that sudden surges in the price of oil cause economic havoc. Conversely, when the price slumps because of a glut, as in 1986, it has done the world a power of good. The rule of thumb is that a 10% fall in oil prices boosts growth by 0.1-0.5 percentage points.
In the past 18 months the price has fallen by 75%, from $110 a barrel to below $27. Yet this time the benefits are less certain. Although consumers have gained, producers are suffering grievously. The effects are spilling into financial markets, and could yet depress consumer confidence. Perhaps the benefits of such ultra-cheap oil still outweigh the costs, but markets have fallen so far so fast that even this is no longer clear.
The new economics of oil
The world is drowning in oil. Saudi Arabia is pumping at almost full tilt. It is widely thought that the Saudis want to drive out higher-cost producers from the industry, including some of the fracking firms that have boosted oil output in the United States from 5m barrels a day (b/d) in 2008 to over 9m b/d now. Saudi Arabia will also be prepared to suffer a lot of pain to thwart Iran, its bitter rival, which this week was poised to rejoin oil markets as nuclear sanctions were lifted, with potential output of 3m-4m b/d.
Despite the Saudis’ efforts, however, producers have proved resilient. Many frackers have eked out efficiencies. They hate the idea of plugging their wells only for the wildcatter on the next block to reap the reward when prices rebound. They will not pack up so long as prices cover day-to-day costs, in some cases as low as $15 a barrel (see article). Meanwhile oil stocks in the mostly rich-country OECD in October stood at 267 days’ net imports, almost 50% higher than five years earlier. They will continue to grow, especially if demand slows by more than expected in China and the rest of Asia. Forecasting the oil price is a mug’s game (as the newspaper that once speculated about $5 oil, we speak from experience), but few expect it to start rising before 2017. Today’s price could mark the bottom of the barrel. Some are predicting a trough of as low as $10.
The lower the better, you might say. Look at how cheap oil has boosted importers, from Europe to South Asia. The euro area’s oil-import bill has fallen by 2% of GDP since mid-2014. India has become the world’s fastest-growing large economy.
Yet the latest lurch down is also a source of anxiety. Collapsing revenues could bring political instability to fragile parts of the world, such as Venezuela and the Gulf, and fuel rivalries in the Middle East. Cheap oil has a green lining, as it drags down the global price of natural gas, which crowds out coal, a dirtier fuel. But in the long run, cheap fossil fuels reduce the incentive to act on climate change. Most worrying of all is the corrosive new economics of oil.
In the past cheap oil has buoyed the world economy because consumers spend much more out of one extra dollar in their pocket than producers do. Today that reckoning is less straightforward than it was. American consumers may have been saving more than was expected. Oil producers are tightening their belts, having spent extravagantly when prices were high. After the latest drop in crude prices, Russia announced a 10% cut in public spending (see article). Even Saudi Arabia is slashing its budget to deal with its deficit of 15% of GDP.
Cheap oil also hurts demand in more important ways. When crude was over $100 a barrel it made sense to spend on exploration in out-of-the-way provinces, such as the Arctic, west Africa and deep below the saline rock off the coast of Brazil. As prices have tumbled, so has investment. Projects worth $380 billion have been put on hold. In America spending on fixed assets in the oil industry has fallen by half from its peak. The poison has spread: the purchasing managers’ index for December, of 48.2, registered an accelerating contraction across the whole of American manufacturing. In Brazil the harm to Petrobras, the national oil company, from the oil price has been exacerbated by a corruption scandal that has paralysed the highest echelons of government.
The fall in investment and asset prices is all the more harmful because it is so rapid. As oil collapses against the backdrop of a fragile world economy, it could trigger defaults.
The possible financial spillovers are hard to assess. Much of the $650 billion rise in emerging-market corporate debt since 2007 has been in oil and commodity industries. Oil plays a central role in a clutch of emerging markets prone to trouble. With GDP in Russia falling, the government could well face a budgetary crisis within months. Venezuela, where inflation is above 140%, has declared an economic state of emergency.
Other oil producers are prone to a similar, if milder, cycle of weaker growth, a falling currency, imported inflation and tighter monetary policy. Central banks in Colombia and Mexico raised interest rates in December. Nigeria is rationing dollars in a desperate (probably doomed) effort to boost its currency.
There are strains in rich countries, too. Yields on corporate high-yield bonds have jumped from about 6.5% in mid-2015 to 9.7% today. Investors’ aversion spread quickly from energy firms to all borrowers. With bears stalking equity markets, global indices are plumbing 30-month lows (see article). Central bankers in rich countries worry that persistent low inflation will feed expectations of static or falling prices—in effect, raising real interest rates. Policymakers’ ability to respond is constrained because rates, close to zero, cannot be cut much more.
Make the best of it
The oil-price drop creates vast numbers of winners in India and China. It gives oil-dependent economies like Saudi Arabia and Venezuela an urgent reason to embrace reform. It offers oil importers, like South Korea, a chance to tear up wasteful energy subsidies—or boost inflation and curb deficits by raising taxes. But this oil shock comes as the world economy is still coping with the aftermath of the financial crash. You might think that there could be no better time for a boost. In fact, the world could yet be laid low by an oil monster on the prowl.
From the print edition: Leaders
JAKARTA kontan. Meskipun Kamis (6/10) sore sempat terkoreksi, harga minyak mentah masih dalam tren kenaikan sebagaimana prediksi para analis. Mengutip dataBloomberg, pukul 16.38 WIB, minyak West Texas Intermediate (WTI) pengiriman November di New York Mercantile Exchange sedikit tergelincir 0,10% ke level US$49,78 per barel setelah sesi sebelumnya pada level US$49,83 per barel.
Kini secara perlahan-lahan minyak mulai bangkit kembali. Pada pukul 20.06 WIB,minyak WTI menanjak ke level US$50,24 per barel. Ini merupakan kali pertamaminyak berada di atas US$50 per barel sejak Juni.
Analis SoeGee Futures Nizar Hilmy melihat, harga minyak memang sudah diprediksi akan melonjak naik pasca pertemuan informal negara-negara anggota Organization of the Petroleum Exporting Countries (OPEC) di Aljazair.
“Pada pertemuan itu, mereka sepakat untuk mengurangi produksi sampai 33 juta barel per hari, bahkan mereka mencari peluang untuk mengajak negara-negara yang bukan anggota OPEC untuk ikut menurunkan output produksi mereka, dan hal itu membantu mengangkat sedikit harga minyak di pasar,” katanya.
Nizar juga menilai koreksi tipis harga minyak pada Kamis (6/10) juga ditopang oleh momentum perjanjian negara-negara anggota OPEC dua pekan lalu yang mulai menurun. Apalagi, pada Kamis (6/10) ini, Aramco, perusahaan plat merah Arab Saudi malah memberi korting pada harga jual minyaknya sampai 45 sen per barel untuk pasar di Asia.
Selain itu, untuk ekspor di pasar AS dan Eropa, Aramco berencana untuk memotong harga jualnya pada bulan November tahun ini. Pemotongan harga jual ini, menurut Nizar adalah sebuah pembuktian bahwa supply di pasarminyak mentah masih berlimpah, maka pemangkasan output produksi OPECdiharapkan segera terealisasi.
Apalagi, karena tren harga minyak sedang baik, orang cenderung untuk profit taking. “Namun harga minyak rasanya masih akan tetap bullish karena banyak faktor,” prediksi Nizar.
Dia melihat, ke depan harga minyak akan tergantung sejauh mana kesepakatan negara-negara OPEC di Aljazair dipatuhi dan dijalankan. Kalau pemangkasan ini benar-benar terjadi, akan ada perubahan yang signifikan terhadap pasokanminyak mentah dunia dan memicu tren kenaikan harga minyak lebih tinggi.
Selain itu, di benua Amerika sedang banyak badai berkecamuk hingga akhir tahun. Hal ini diyakini Nizar sebagai faktor penghambat produksi minyak global, sehingga dapat kembali menggenjot harga.
oil price : Market enthusiasm around the OPEC deal has facillated significantly over the last week, alternating between optimism and pessimism. A healthy segment of investors view the current agreement with skepticism given the competing geopolitical interests of Iran and Saudi Arabia. And while that skepticism may turn out to be unwarranted; it is certainly possible that one or more of the OPEC members will cheat on any production agreement and overproduce, especially given the lack of effective monitoring mechanisms in place to control production.
None of that matters much though. The more significant point about the OPEC agreement that investors may be missing is the sign of shifting attitudes that it portends. An agreement between two foes as intractable as the Saudis and Iran suggests that OPEC has finally accepted an important reality – they cannot turn back time. While U.S. unconventional production has been curtailed, only a fool would believe it has been hobbled permanently. As oil prices start to rise, U.S. production will likely rise as well.
OPEC seems to have finally accepted the fact that they are not as strong as they once were, and that the market forces behind unconventional production in the U.S., Canada, and abroad are not as weak as OPEC had supposed. While a few U.S. firms have been bankrupted by the last few years, those bankruptcies have only served to strengthen top tier players in the space like Devon and Continental.
Far from shutting down U.S. production, OPEC’s actions have only helped to lower costs by putting pressure on the overall supply chain and associated prices. This has made unconventional crude more profitable at lower prices and exacerbated the problem that OPEC started with. Where unconventional crude producers once needed $80 per barrel oil prices to succeed, today breakeven levels are closer to $40.
Related: Oil Holds Gains After OPEC Deal
OPEC appears to have finally given up the dream of crushing U.S. production and returning to a world in which the Cartel controlled the market. US producers may not be the lowest cost producers, but could well be the most flexible producers. OPEC’s actions did succeed in stalling new investment in future reserves development, but this hit both unconventional and conventional production in nearly equal measure.
If OPEC could have sustained a decade or more of low prices, eventually the curtailed E&P programs would have led to a structural shift in the oil markets and pushed new production down dramatically. OPEC never had that level of foreign currency reserves though. The Saudis would have needed at least $2 trillion more in reserves in order to sustain lower oil prices for a decade, and while that might be feasible for the Kingdom (with enormous asset sales and tapping international bond markets), most other members of OPEC would have run out of cash well before that ever occurred. To kill unconventional production, OPEC needed a scorched earth policy that its members were ill-prepared to adopt.
None of this means that oil is headed dramatically higher immediately or that companies will return the halcyon days of yesteryear. The market has changed. But OPEC’s production deal does signal acceptance of reality by the Cartel. Producers from the Saudis to Nigeria do not have the ability to withstand continued low prices. They are taking corrective action at this point because few options are left, and domestic political pressures are too great. Investors can capitalize on this trend. The current deal may or may not hold, but the game OPEC was playing for the last two years is coming to an end.
By Michael McDonald of Oilprice.com
cnbc: The commodities’ strategist who called the rally in crude this week says more gains are to come, as Saudi Arabia appears ready to play ball and scale back production—a move likely to boost oil prices.
“This speaks to the economic realities of lower oil prices that are really biting Saudi Arabia,” said top RBC commodities analyst Helima Croft on CNBC’s “Futures Now” this week. The world’s largest oil producer, along with other major oil producers, has struggled economically with crude languishing below $50 per barrel.
“Saudi Arabia really had to give considerable ground to accommodate the Iranian demands to get the deal done,” Croft told CNBC. “This is more than just a freeze. It’s actually cutting from current levels.”
A deal of this nature represents the first reduction since 2008. Once announced, the deal sent crude prices soaring over 5 percent on Wednesday before closing the week above $48. Now Croft, who has been calling for $50 oil for since the 2016 lows, explained that her firm remains bullish through the end of 2016, with the notion that a floor is now in place.
“It can continue to be choppy based on weekly stats, rig count numbers and broader macro trends,” she added. “But we think we are done with sub-$40, barring a major macro meltdown panic, and firms the case for 50’s by year end and trending into the 60’s next year.”
Croft told CNBC that her firm expects the pact to hold with a belief that the Saudis are willing to bear the lion’s share of the reductions needed to get down to 32.5 million barrels of oil produced each day globally by OPEC members.
The agreement, slated to go into effect in November, would require Saudi energy minister Khalid al-Falih to oversee major production cuts in order to help reduce nearly 1 million barrels from the market on a daily basis.
In a research note that claimed OPEC ‘blinked’, analysts at Bank of America-Merrill Lynch also said they expect oil prices to reach $60 by next year, and maintained a mid-2017 target of $70. Still, the move by OPEC underscored a new reality in world energy markets.
“We’ve gotten beyond the peak power generation,” explained Croft when discussing why cuts from top producers are realistic. “So Saudi production tends to trend down lower anyway. They’ll probably come in at their January numbers at 10.2 [million barrels a day].”
However, Croft addressed concerns that producers may now ramp production in the coming months to counter the November cuts. She strongly believes that OPEC is for real this time as members can’t sustain the low price of oil for much longer.
“Saudi Arabia was serious about doing this. I think they ramped production because of peak seasonal factors. That was a Summer ramp that we saw,” Croft added, referencing Saudi Arabia’s record output in June.
“Saudi Arabia needs the money and I think this speaks to domestic considerations,” Croft said. “That’s why they made this deal.”
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