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Page added on April 14, 2015
Saudis Ready To Help Improve Oil Prices
Saudi Arabia’s oil minister Ali al-Naimi said on Tuesday that the kingdom stood ready to “improve” prices but only if other producers outside of OPEC joined the effort.
Naimi said Saudi Arabia had pumped around 10.3 million barrels per day (bpd) in March, marking an increase from previous months. He did not say why output had risen. Naimi also said he expected oil prices that have languished near six-year lows to improve in the near future.
Oil prices extended gains late on Tuesday as traders took Naimi’s comments as sign he may be open to renewed talks with producers like Russia and Mexico over curbing production in order to revive prices. U.S. crude rose 3.5 percent to close at $53.98 a barrel, near its highest this year.
“The kingdom is still ready to help bring back stability to the market and improve prices in a reasonable and suitable manner, but with the participation of the main producing and exporting countries and based on clear principles and high transparency, so the kingdom or the Gulf countries or OPEC countries do not shoulder that alone,” he said at a Saudi economics conference.
The Organization of the Petroleum Exporting Countries (OPEC) agreed to maintain production at its meeting last November, despite pressure to curb output and stabilize sliding prices, after discussions with Russia and Mexico ended without action.
Naimi has taken a more open stance toward collaborating with big oil exporters outside of OPEC in recent months, as oil prices fell much further than some members of the oil producer group had expected.
His comments about cooperating with other producers “added to two days of bullishness,” said Dominick Chirichella, senior partner at Energy Management Institute in New York.
Naimi also reiterated that Saudi Arabia was not competing with U.S. shale oil, and took the chance to talk about the kingdom’s own development of its shale natural gas resources.
Saudi expects to begin producing some 20 million to 50 million cubic feet per day of shale gas next year, rising to 500 million cfd by 2018, he said. The kingdom’s has 300 trillion cubic feet of extractable natural gas reserves, he added.
5 Comments on "Saudis Ready To Help Improve Oil Prices"
BobInget on Wed, 15th Apr 2015 9:34 am
Running hundreds of fighter-bombers 24/7
proved even more expensive then KSA
believed.
Fill a one gallon milk jug with water. Now
without the cap, turn that jug up-side down,
this approximates fuel consumed real time for one single F/16.
Now, do the same times one hundred.
For Each and Every Hour of flight time, each aircraft requires from $16,000 to $50,000 to
$169,000 maintenance.
http://nation.time.com/2013/04/02/costly-flight-hours/
This obviously, is why the US uses drones.
In asymmetric, target poor, warfare.
(Under $5,000 per hour for that drone).
http://forum.keypublishing.com/showthread.php?95008-list-of-combat-aircraft-flight-cost-per-hour
The Saudis are doubtless picking up the bills for seven other nations engaged.
http://en.wikipedia.org/wiki/2015_military_intervention_in_Yemen
BobInget on Wed, 15th Apr 2015 9:45 am
EIA report just released:
http://www.livecharts.co.uk/MarketCharts/crude.php
Summary of Weekly Petroleum Data for the Week Ending April 10, 2015
U.S. crude oil refinery inputs averaged over 16.2 million barrels per day during the week
ending April 10, 2015, 283,000 barrels per day more than the previous week’s average.
Refineries operated at 92.3% of their operable capacity last week.
Gasoline production
increased last week, averaging over 9.2 million barrels per day. Distillate fuel production decreased slightly last week, averaging 5.0 million barrels per day.
U.S. crude oil imports averaged over 7.1 million barrels per day last week, down by 1.1
million barrels per day from the previous week.
Over the last four weeks, crude oil
imports averaged over 7.5 million barrels per day, 0.2% above the same four-week period
last year.
Total motor gasoline imports (including both finished gasoline and gasoline
blending components) last week averaged 545,000 barrels per day. Distillate fuel imports
averaged 219,000 barrels per day last week.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum
Reserve) increased by 1.3 million barrels from the previous week. At 483.7 million
barrels, U.S. crude oil inventories are at the highest level for this time of year in at least
the last 80 years.
Total motor gasoline inventories decreased by 2.1 million barrels last week, but are well above the upper limit of the average range. Both finished gasoline
inventories and blending components inventories decreased last week.
Distillate fuel inventories increased by 2.0 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 2.1 million barrels last
week and are well above the upper limit of the average range. Total commercial
petroleum inventories increased by 7.2 million barrels last week.
Total products supplied over the last four-week period averaged 19.1 million barrels per
day, UP by 4.3% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 8.9 million barrels per day, UP by 0.7% from the same period
last year. Distillate fuel product supplied averaged about 4.0 million barrels per day over the last four weeks, UP by 2.9% from the same period last year.
Jet fuel product supplied
is UP 10.7% compared to the same four-week period last year.
Poster’s note…
This is the first double digit increase in Jet Fuel an excellent economic indicator.
joe on Wed, 15th Apr 2015 11:18 am
With oil prices rising and US output slipping but not routing, the scope for the US to quickly rebuild capacity then isn’t this a sign that Saudi made a mistake? If open lowers output they can manipulate prices better. This would extend the age of easy oil and secure US supply. Getting everyone to cut at the same time would be impossible without a big oil president. Expect a wild election. Expect isis to get a boost in Libya, the factions are just about to for a unity government their oil will come back strong if they do Saudi won’t permit that. Opec can’t fight shale oil with one hand and fight each other.
rockman on Wed, 15th Apr 2015 1:02 pm
Joe – “With oil prices rising and US output slipping but not routing, the scope for the US to quickly rebuild capacity then isn’t this a sign that Saudi made a mistake?”. First, we’re in the very earliest stages of the shale production decline as a result of the rig count dropping. Virtually all the shale wells that have come on production in the last month or two finished drilling come time in 4Q 2014…or earlier…when the rig started heading to the yards. I don’t expect to see the full impact of the rig inactivity fully showing up until3Q/4Q 2015.
As far a the expectation for the US to “quickly rebuild capacity” I’m not sure who you’ve heard that from but I speak with the operators and service companies almost daily and all I get from every one of them is expectations of matters getting worse long before it gets better. Granted you might be hearing different from company PR departments but those aren’t the folks that actually drill wells.
Nony on Wed, 15th Apr 2015 5:23 pm
Compared to deepwater or the like, shale is very easy to turn on again and fast. A lot of the gathering systems are in and there are newly trained workforces, rigs sitting idle, etc.
If price goes to 100 again, the party turns on again. Shale is the marginal barrel. 50 is too low and 100 is too high. Equilibrium is at some price that strangles the right amount of shale. Say 70. That’s where we head.