Crude Oil Caps Longest Run of Monthly Advances in Five Years
Source: Bloomberg
Oil capped the longest run of monthly gains in five years as a spate of disruptions curb supply before OPEC meets Thursday to discuss production policy.
Futures slipped Tuesday, trimming a fourth consecutive monthly advance, as Canadian producers start to resume operations after wildfires eased. Militant attacks have cut Nigerian supply to the lowest level in more than two decades. Libyas Petroleum Facilities Guard captured towns near the oil ports of Es Sider and Ras Lanuf after clashes with Islamic State militants.
"Canadian production should come back quickly," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "I wonder what it will take to continue this rally above $50, especially given that we have near-record global inventories. The rally was in large part due to production disruptions and at least some are easing."
Oil has surged more than 85 percent since touching a 12-year low in February on signs the global surplus is easing amid declining output. The Organization of Petroleum Exporting Countries is unlikely to reach an agreement limiting production this week in Vienna as the group sticks with Saudi Arabias strategy of squeezing out rivals, according to analysts surveyed by Bloomberg.
Read more: http://www.bloomberg.com/news/articles/2016-05-31/oil-set-for-longest-run-of-gains-in-5-years-before-opec-meeting
Andy823
(11,495 posts)For rising oil prices, and gas prices, but we still have a glut, and once everybody gets back on line, Canada, and the oil sands gang starts increasing their drilling since "prices are up", the glut will grow, but prices will not go down the rest of the summer. It's something that happens every year. Gas prices go up in May and stay up till after labor day, for the summer driving increases. They always find a way to justify their greed with higher prices.
happyslug
(14,779 posts)Saudi Arabia and Russia are the #1 and #2 oil exporters in the world today (and have been since at least the 1970s), together they export more oil then the next 5 oil exporters combined (Based on 2013 estimates, by 2013 production, the next 12 oil exporters). OPEC has for decades been called the tail that the dog Saudi Arabia shakes. Russia has been and continues to be the only other major oil exporter (the #3 oil producer is the US, but the US is still a net oil IMPORTER, and that is NOT expected to change given the decline in oil from Fracking over the last few years, in 2014 or earlier it was predicted that the US may become a net oil exporter bu 2017, but that is no longer possible given the drop in oil wells being drilled since 2014).
Russia and Saudi Arabia produce more oil then the next five nations combined:
http://www.eia.gov/beta/international/
Of the top four oil PRODUCERS, two, the US and China are net oil IMPORTERS:
https://en.wikipedia.org/wiki/List_of_countries_by_oil_production
Please note the #13 oil exporter is Kazakhstan, a close ally of Russia.
Thus the price of oil is whatever the House of Saud and Putin can agree on, if they can not agree then the bottom price is whatever is the cost of production of the rest of the oil exporters, for both Saudi Arabia and Russia have the lowest cost of oil production on top of being the top two oil exporters.
In the 1980s, the price of oil dropped as Iran and Iraq exported all the oil they could to buy arms to kill each other. Saudi Arabia tried to stabilize the price but could not (and the drop in the price of oil in the 1980s was on the the reasons the Soviet Union Collapsed, the USSR had become to addicted to oil exports to pay for its arms that they went bankrupt when Russian Oil production declined starting about 1985).
Russia is support the Assad of Syria-Kurds- Iranian-Iraq Shiites alliance, while the House of Saud and Turkey supports IS (I suspect Greece supports the Iran-Syrian alliance, but they are so broke they can not participate in the alliance right now, I mention the Greeks, to show this is much more then a Shiite-Sunni Religious fight, it is about long term traditional alliances tied in with Natural Gas exports to Europe).
Putin moved to protect Assad, but has now pulled out of Syria, which may give the House of Saud the ability to save face by restricting production if Putin agrees to restrict production. I do not see Iran agreeing to restrictions on its oil exports, but Putin may agree to a greater Russia oil cut back to offset Iranian increased oil exports.
Right now the price of oil is up the the House of Saud and Putin, can they come to an agreement? If they can, the price will go up? If they can NOT agree, the price will continue to fall.