Canadian dollar sinks below 88 cents as Saudis cut oil to $77

[ranchlandsselling]

Originally Posted by edslunch

The funny thing in all this is that the Saudis aren't actually doing anything to make oil fall - it's purely market forces at work. Ironically they're catching crap for NOT manipulating the market like they usually do.

They're certainly enjoying throwing around numbers publically to help. Look how many news outlets carried the "we won't cut if oil hits $20.00". While not calling for $20 oil it's certianly reported like it's possible. I'm not suggesting that's their goal, to talk the market down, but it's not uncommon as the Fed and BOC do it all the time with their monetary policies.

[Frequitude]

Originally Posted by GP_Matt

This seems to be a debate about which benefit the Saudis are enjoying the most.

• Lower prices hurt Russia
• Lower prices hurt Iran
• Lower prices reduce exploration and development spending which leads to
• higher prices in the long run
• Lower prices prevent export pipelines in Alberta from being built
• Lower prices prevent Russian pipelines to China from being built
• Lower prices prevent/delay a switch to renewable products
• Lower prices encourage consumption and could lead to an expanded market in the future

A good list, but I think you're missing the simplest reason...to help out their largest customer, China, who could use some low prices to get growth ramped back up. China will be buying their oil for a long time and won't forget it.

All in all, low prices ticks so many boxes for the Saudis in one simple tolerable move.

[nik-]

http://www.nytimes.com/aponline/2014...i-economy.html

but "they can do it forever". Saudi Aramco may be making money, but their country is bleeding bad.

[ExiledFlamesFan]

Originally Posted by nik-

http://www.nytimes.com/aponline/2014...i-economy.html

but "they can do it forever". Saudi Aramco may be making money, but their country is bleeding bad.

Yep. They are panicking now. 39 billion deficit with 800 billion in cash reserves left.

The Saudis can outlast anyone. They aren't concerned. All of their competition will be out of business before they run out of cash.

At this deficit rate they'll last more than 20 years before they run out of cash.

[oilyfan]

The Saudis are doing fine, it's others in the OPEC including Venezuela, Iran and Nigeria that are really sliding down the hill.

The Saudis have built a budget based on $60 Brent.

[ExiledFlamesFan]

Originally Posted by oilyfan

The Saudis are doing fine, it's others in the OPEC including Venezuela, Iran and Nigeria that are really sliding down the hill.

The Saudis have built a budget based on $60 Brent.

It's become apparent that the Saudis no longer care about Nigeria or Venezuela. The Saudis and their Gulf brothers are acting in their own best intersts, Nigeria and Venezuela be damned. There will be casualties.

[Traditional_Ale]

Originally Posted by ExiledFlamesFan

Yep. They are panicking now. 39 billion deficit with 800 billion in cash reserves left.

The Saudis can outlast anyone. They aren't concerned. All of their competition will be out of business before they run out of cash.

At this deficit rate they'll last more than 20 years before they run out of cash.

And if they did actually go for 20 years, Calgary would be the next Detroit.

[ExiledFlamesFan]

Originally Posted by Traditional_Ale

And if they did actually go for 20 years, Calgary would be the next Detroit.

Which will not happen. Just as Saudis will not run out of cash.

[nik-]

Originally Posted by Traditional_Ale

And if they did actually go for 20 years, Calgary would be the next Detroit.

We'll have race riots that lead to the fleeing of our tax base to other municipalities?

There is no parallel for Detroit. It wasn't just economic.

[PeteMoss]

Originally Posted by nik-

We'll have race riots that lead to the fleeing of our tax base to other municipalities?

There is no parallel for Detroit. It wasn't just economic.

Yes... people have just moved from the city of Detroit to the surrounding area. Basically just people out of Calgary to whatever other town/cities are nearby.

[Bill Bumface]

Better comparisons would be Buffalo or Pittsburgh. I hope we take the Pittsburgh path, that city is doing great again and looks like a really nice place to live.

[Flash Walken]

Originally Posted by SeeGeeWhy

So... If this is indeed a play to control market share, it Would have to be pre-emptive in nature. Meaning, the US must be considering changing it's export laws which indeed would allow US production to threaten the Saudi's grip on the largest and fastest growing oil consumption market in the world.

http://www.reuters.com/article/2014/...0K908M20141231

(Reuters) - The Obama administration has opened a new front in the global battle for oil market share, effectively clearing the way for the shipment of as much as a million barrels per day of ultra-light U.S. crude to the rest of the world.

The Department of Commerce on Tuesday ended a year-long silence on a contentious, four-decade ban on oil exports, saying it had begun approving a backlog of requests to sell processed light oil abroad. It also issued a long-awaited document outlining exactly what kinds of oil other would-be exporters can ship.

The administration's first serious effort to clarify an issue that has caused confusion and consternation in energy markets for more than a year will likely please domestic oil drillers, foreign trade partners and some Republicans who have urged Obama to loosen the export ban, which they see as an outdated holdover from the 1970s Arab oil embargo.

[Tyler]

Originally Posted by hulkrogan

Better comparisons would be Buffalo or Pittsburgh. I hope we take the Pittsburgh path, that city is doing great again and looks like a really nice place to live.

Most underrated city in the USA. Love it there.

[stampsx2]

Why opec will lose:


Fracking may be unsustainable at $50 a barrel but other opec countries have economic instability while they wait for fracking to fail.

In the mean time, the u.s. benefits from oil profits not funding the iranian nuclear program, islamic state terrorism and russian military modernization.

The, u.s. also benefits from a boost to their economy from lower oil prices.

When oil bottoms out and starts to rise again fracking will resume. Oil revenue countries can't keep oil prices low forever. Not even the saudis. Almost all the opec nations are running budget defecits while they wait.

The longer they wait the lower the break even point for oil fracking becomes as new and better technologies emerge.

main points from a well written article:
http://www.mycentraljersey.com/story...king/20847911/

[SeeGeeWhy]

Originally Posted by Flash Walken

http://www.reuters.com/article/2014/...0K908M20141231

Very, very interesting. Thanks for the share.

I would like to think that a well organized North American oil and gas distribution network would be able to efficiently deliver our abundant resources to growing Asian markets. I think on the whole, this would benefit Alberta as well as domestic US light oil producers.

[ranchlandsselling]

So isn't it a little bit hypocritical of the Obama administration to be allowing exportation of up to a million barrels a day of oil when they won't approve the Keystone?

[Derek Sutton]

Originally Posted by ranchlandsselling

So isn't it a little bit hypocritical of the Obama administration to be allowing exportation of up to a million barrels a day of oil when they won't approve the Keystone?

Nope, Obama should be concerned with what is best for the USA. Them exporting is much more benficial for them then just letting Canada use their refineries and export Canadian oil out of the Gulf.

[ranchlandsselling]

Originally Posted by Derek Sutton

Nope, Obama should be concerned with what is best for the USA. Them exporting is much more benficial for them then just letting Canada use their refineries and export Canadian oil out of the Gulf.

The two aren't mutually exclusive. Obama can be and should be concerned about what's best for the USA while still being a hypocrite with respect to how he goes about doing that.

Changing laws that allow them to increase oil extraction in an oversupplied and falling market while vilifiying the KXL as being bad for the environment is hypocritical.

You're right, but it's irrelevant to what I was saying.

[chemgear]

Falling through $51 today.

EDIT: through $50 actually. And now $48 the next day. Not much support at these prices at all.

[V]

So what would be considered the best way for a casual investor to go long on oil? Do you just buy USO, or do you buy the major companies like SU, CVE, etc.? I know nothing about futures, and don't think that's the best way for a noob like me to invest my money. Unless someone wants to give me a crash course on it.