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

[Dan02]

Originally Posted by corporatejay

Yup, I think we are collateral damage.

Isn't one of the likely victims the highly leveraged high cost shale oil producers in the US??

[chemgear]

Originally Posted by FlameOn

OPEC member speak regarding the lower price of oil. Member from UAE states they do not plan to cut production even if oil drops to $40/bbl.



http://money.cnn.com/2014/12/14/news...ice/index.html

A few more details of the comments:

http://www.bloomberg.com/news/2014-1...ops-to-40.html

“We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg yesterday at a conference in Dubai. “We’re not targeting a price; the market will stabilize itself.” He said current conditions don’t justify an extraordinary OPEC meeting. “We need to wait for at least a quarter” to consider an urgent session, he said.

“We will not have a real picture about oil prices until the end of the first half of 2015,” El-Badri said. Price will have settled by the second half of next year, and OPEC will have a clear idea by then about “the required measures,” he said.

OPEC kept its target unchanged last month because the group was uncertain whether a cut ranging from 1 million to 1.5 million barrels a day would have boosted prices, El-Badri said. The group wasn’t seeking to put pressure on the U.S. or Russia by maintaining output, he said.

“Our expectation in OPEC is that after 2020, the oil industry in the U.S. will decline” due to the nation’s low reserves, he said. The U.S. won’t become self-sufficient in oil and will continue to depend on Middle Eastern supply, El-Badri said.

[gladaki]

http://www.telegraph.co.uk/finance/n...-minister.html

Opec's most influential producers are willing to allow oil prices to fall to $40 per barrel before discussing whether the cartel should hold an emergency meeting to discuss cutting output.

Looks like all OPEC want from US is to cut down the production.

[Drummer]

Someone needs to change the title of this thread to "Oil price and Canadian dollar watch"

[Azure]

Obviously OPEC wants the US to cut production.

That is the only reason all of this is happening.

[chemgear]

Originally Posted by Azure

That is the only reason all of this is happening.

It's more a supply versus demand issue. Oil prices have been dropping substantially and consistently for many months now as worldwide production continues to grow more than there is demand.

Near term, the "official OPEC" party line and comments has only just sped up what has already been happening for more than half a year now.

[Azure]

And the sudden panic is resulting in a faster decline in the oil price.

The market will correct itself eventually, but if US producers are leveraged way too high they will suffer first. OPEC is rather hilarious though. Quite clear that they don't want any other significant oil production happening anywhere in the world.

[HockeyIlliterate]

Originally Posted by chemgear

“Our expectation in OPEC is that after 2020, the oil industry in the U.S. will decline” due to the nation’s low reserves, he said. The U.S. won’t become self-sufficient in oil and will continue to depend on Middle Eastern supply, El-Badri said.

So what happens if OPEC's expectation is wrong?

How do the members of OPEC plan on supporting their citizens when their oil supply is no longer needed?

[blankall]

Originally Posted by chemgear

A few more details of the comments:

http://www.bloomberg.com/news/2014-1...ops-to-40.html

“We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg yesterday at a conference in Dubai. “We’re not targeting a price; the market will stabilize itself.” He said current conditions don’t justify an extraordinary OPEC meeting. “We need to wait for at least a quarter” to consider an urgent session, he said.

“We will not have a real picture about oil prices until the end of the first half of 2015,” El-Badri said. Price will have settled by the second half of next year, and OPEC will have a clear idea by then about “the required measures,” he said.

OPEC kept its target unchanged last month because the group was uncertain whether a cut ranging from 1 million to 1.5 million barrels a day would have boosted prices, El-Badri said. The group wasn’t seeking to put pressure on the U.S. or Russia by maintaining output, he said.

“Our expectation in OPEC is that after 2020, the oil industry in the U.S. will decline” due to the nation’s low reserves, he said. The U.S. won’t become self-sufficient in oil and will continue to depend on Middle Eastern supply, El-Badri said.

If I'm the USA I continue building the infrastructure for oil production regardless of profitability. The USA invests a huge amount of money into the middle east and the fallout from from spikes in oil prices. That money would be better spent giving workers jobs to produce infrastructure. Much like the did building highways a few decades ago.

[Regorium]

Originally Posted by blankall

If I'm the USA I continue building the infrastructure for oil production regardless of profitability. The USA invests a huge amount of money into the middle east and the fallout from from spikes in oil prices. That money would be better spent giving workers jobs to produce infrastructure. Much like the did building highways a few decades ago.

That basically involves a bailout of oil companies so that they can keep operating in unprofitable conditions. I'll give you one guess as to how the American (and Canadian) people would react to such a policy.

[blankall]

Originally Posted by Regorium

That basically involves a bailout of oil companies so that they can keep operating in unprofitable conditions. I'll give you one guess as to how the American (and Canadian) people would react to such a policy.

I'd disagree on that characterization as you'd be putting the money into potentially publicly owned infrastructure.

If you do want to characterize it as a bailout, it's a much better option than being at the mercy of the Saudi royals or having to pay for much larger bailouts later on.

[Flash Walken]

Originally Posted by Azure

Obviously OPEC wants the US to cut production.

That is the only reason all of this is happening.

Opec are putting pressure on Iran and Russia, that's the reason this is happening.

[FlameOn]

Originally Posted by Flash Walken

Opec are putting pressure on Iran and Russia, that's the reason this is happening.

It's more Saudi putting pressure on everyone that isn't Saudia Arabia. They want to kill US unconventional oil producers who have high production costs while at the same time punish Russia for it's foreign policy. Venezuela and Russia though both have regimes that rely heavily on the support of ignorant masses which are heavily influenced by oil subsidies. We'll probably see a destabilization of these two if the prices remain low for more than half a year.

Russians are already being screwed by sanctions that have seen food prices rise more than 25% since the June. Once the oil prices drop, I wonder how long it'll take before regular Russian's have issues that Putin cannot explain away.

[chemgear]

Originally Posted by oilyfan

http://www.bloomberg.com/news/2014-1...-near-end.html

Hedge Funds Bet That OPEC-Led Oil Rout Is Near End

Bloomberg with an update on their original article:

http://www.bloomberg.com/news/2014-1...ng-energy.html

Speculators added to wagers that the slump in oil futures, the worst since the global recession, is ending. Prices kept falling anyway.

Money managers raised their net-long position in U.S. crude to the highest in two months in the week ended Dec. 9, U.S. government data show. Most of the change came from short holdings contracting to the lowest level since August.

Investors added $264.5 million into the four funds so far this month, following a $559.85 million inflow in November that was the most since June 2012.

“This shows that there’s a lot of skepticism about the selloff and a feeling that prices should soon rebound,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone Dec. 12. “We’re seeing bargain hunting by investors of all stripes.”

[V]

Is there really a bad play right now for major oil producers? I'm looking at the board and having a hard time deciding where to put my money. Not to mention when to invest it.

[terminator]

Originally Posted by V

Is there really a bad play right now for major oil producers? I'm looking at the board and having a hard time deciding where to put my money. Not to mention when to invest it.

I'd wait for the bounce up before doing anyting.

[blankall]

Originally Posted by FlameOn

It's more Saudi putting pressure on everyone that isn't Saudia Arabia. They want to kill US unconventional oil producers who have high production costs while at the same time punish Russia for it's foreign policy. Venezuela and Russia though both have regimes that rely heavily on the support of ignorant masses which are heavily influenced by oil subsidies. We'll probably see a destabilization of these two if the prices remain low for more than half a year.

Russians are already being screwed by sanctions that have seen food prices rise more than 25% since the June. Once the oil prices drop, I wonder how long it'll take before regular Russian's have issues that Putin cannot explain away.

I'd definitely agree and say at least part of this is to put a halt to US shale development. The US is on the verge of energy independence from the middle east. The Saudis want to keep their biggest customer on the hook.

[bizkitgto]

Originally Posted by blankall

I'd definitely agree and say at least part of this is to put a halt to US shale development. The US is on the verge of energy independence from the middle east. The Saudis want to keep their biggest customer on the hook.

Why are people still clinging to the fact that the USA will be energy independent? It's been said over and over that the shale drillers are under water and can't keep up with their debt payments, with oil tanking it's a matter of time before they are officially bankrupt and then you'll see fire-sale prices of their land holdings (I heard somewhere around 2017-2020). The shale boom was never sustainable, just another bubble fueled by cheap credit similar to the real estate bust and dot-com bubble. From bubble to bubble we go.....

http://www.bloomberg.com/news/2014-1...t-markets.html

[ExiledFlamesFan]

Originally Posted by V

Is there really a bad play right now for major oil producers? I'm looking at the board and having a hard time deciding where to put my money. Not to mention when to invest it.

I'm in the same situation as you, lots of cash with my eye on suncor. But with oil dropping daily I'm gonna wait until it plateaus which likely won't be until the new year.

[blankall]

Originally Posted by bizkitgto

Why are people still clinging to the fact that the USA will be energy independent? It's been said over and over that the shale drillers are under water and can't keep up with their debt payments, with oil tanking it's a matter of time before they are officially bankrupt and then you'll see fire-sale prices of their land holdings (I heard somewhere around 2017-2020). The shale boom was never sustainable, just another bubble fueled by cheap credit similar to the real estate bust and dot-com bubble. From bubble to bubble we go.....

http://www.bloomberg.com/news/2014-1...t-markets.html

The only reason they are underwater is due to the low oil prices.... Which is exactly my point. If oil prices were at their natural levels the shale fields would be profitable.

Instead OPEC is using the same simple and dirty trick all monopolists use. Sell at artificially low prices, drive the smaller and developing competition out of business, and then jack up the price.