Very few people saw this coming. The ramifications are obviously huge.
CLC1 - LIGHT CRUDE CON1
Last : $68.29
Chg : -5.400
Bid/Ask : 68.28/68.30
Trade Time 11:53am EST
Prev. Settlement 73.690
Prev Settle Date 26 Nov 2014
I read opposite... they went along because they had simply no choice. Before the meeting they were pushing for a cut.
Russia also doesn't have a choice. Unlike OPEC members, Russia cannot simply throttle back Siberian production. Plus, they need every dollar.
|Quoting einsteinboricua (Reply 101):|
Is ROPEC's move to make a massive production cut to bring back oil to a more comfortable level some time in the future?
The meeting shows how OPEC is losing (has lost) its grip on the oil market. Just a hint of a production reduction would have been enough to send prices climbing in the past... but not now Clearly this is all about the Saudis... the other members were mere bit players.
|Quoting Tugger (Reply 103):|
The real question is how will the shale producers react? It will take at least a year to see any effect as there is too much capital tied up in the production and momentum will carry it on for a while and the return on that capital is still needed. They key thing is that no matter what does happen in the next few years the world and the industry knows that these additional resources are there which will affect the pricing power of OPEC.
Well, now we'll see what the true prices are for extracting shale oil at the different basins and for the different producers.
There are a few things that collectively are upsetting OPEC's cart in addition to shale oil:
- Slowed down or stalled real growth
- Continued increasing efficiency
- Increasing alt fuel & energy use
Other things that could contribute to further upsetting OPEC's cart in the mid and long term future:
- One of 3 pipelines getting approval to be built from the tar sands in Canada
- Japan Nuclear restarts
- Resolution of ME and Libyan conflicts (both Libya and Iraq are pumping below capacity)
- Petrobras, Pemex and PDVSA getting their acts together
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