The price of oil is becoming less predictable
The lower the price of oil – the more controversy is between the major producers of black gold in the world. Key player, Saudi Arabia, what is happening, apparently, quite satisfied, and for good reason. But a number of other countries call to act immediately – otherwise it will be even worse.
On Friday, world oil prices for the first time since 2010, fell below $ 90 per barrel. Over the weekend, Brent futures for November delivery was copied at least four years (87.76 per barrel), but by the end of trading on Sunday compensate part of the fall.
«Saudi Arabia, which had supported world oil price around the level of 100 dollars, now is not opposed to reduce it to $ 80» On Monday, the decline has resumed : 15.14 MSK on North Sea oil mixture on the Nymex Exchange lost 2.28% in value and cost 88.1 dollars per barrel. American variety WTI cheaper by 1,62% – to 84.38 dollars per barrel.
The world is concerned about the continuing decline in oil prices, and that is extremely quiet the reaction that shows the response of OPEC. The organization does not interfere in the situation, although three months, oil prices have fallen to 21,7%.
OPEC for and created in 1960 to regulate the supply and demand for oil market and keep prices stable. To do this, just call a meeting and to reduce production quotas. OPEC includes 12 states – oil exporters that provide 40% of world oil production, with 77% owned by all of the world’s oil reserves.
Scheduled OPEC session should pass on November 27th. Meanwhile, among the – member of the alliance is no consensus about the need to reduce production. On the one hand, Venezuela is seeking a meeting prior to the next scheduled for November session of OPEC. Iran also criticizes the omission of OPEC. A senior Iranian Oil Ministry Mehran Amirmoini recalls how “the inappropriate actions of OPEC in 1998 led to a drop in prices up to 6 – $ 8 per barrel».
«Iran expressed disagreement with the current export quotas. A desire to join his position as hinted Nigeria and Angola. Likely to support “a mighty three” Algerian oil producers. In addition, the decline in oil prices strongly excited low-margin companies engaged in the extraction of shale energy, most of which have the status of residents of the USA and Canada », – the director of the analytical department of the IG” Nord-Capital “Vladimir Rozhankovskiy.
On the other hand, Saudi Arabia and the United Arab Emirates do not see the need for an emergency meeting of the organization. Moreover, Saudi Arabia, which had supported world oil price levels near $ 100, now has no objection to reduce it to $ 80. Moreover, at this level the country is ready to hold oil is not a couple of months, and as many as one – two years. It talked about this Saudi officials on personal meetings with industry analysts and investors last week, says Reuters.
According to the calculations of Saudi Arabia, the low prices will keep their investment in production, particularly in the shale deposits in the United States and deepwater fields, which further helps prices rise, and the country – to save the position of the largest exporter in the world market. Saudi Arabia accounts for about a third of OPEC – 9,7 million barrels per day.
Interestingly, Kuwait said that OPEC is now very little avail. “I do not think that today countries (cartel members) have a chance to decide to reduce production in view of the fact that its own OPEC quota is 30 million barrels, and still have not chosen», – said the Minister Kuwaiti Oil Ali Al-Omair.
«If I have to do something to maintain the stability of prices and their return to the previous level, we will not hesitate. But this decline is not due to OPEC decisions », – Kuwait’s oil minister said. Based on this, he predicts decline in prices by 14%, to $ 76 per barrel. “76 – $ 77 per barrel may be the level at which the decline will stop», – said Ali Al-Omair.
However, the statement by the representative of Kuwait that OPEC is not possible to stabilize world oil prices, are evil. “In our view, this is a bluff designed to falsely set the market on a long-term decline in oil prices. OPEC has always been, is and will be an opportunity both to reduce or increase the quota. The only question is only in consensus and compromise its members », – says the newspaper VIEW director of the analytical department of the IG” Nord-Capital “Vladimir Rozhankovskiy.
He doubts that an unscheduled session of OPEC still take place, as a number of countries want, but a planned meeting at the end of November will be very hot in terms of дебатов.
Причины
Фундаментальная cause of the fall in prices – the excess of supply over demand. Firstly, it has become more oil to the American market because of the shale gas revolution. On the other hand, began to produce more black gold OPEC. In particular, Libya, Iran and Iraq began to return to the market.
In this case, the demand began to decline. The same China reduced buying black gold fell and demand from Europe. Poured oil on the fire situation in the world economy. Oil accelerated drop after reducing the IMF forecast the pace of its growth: in 2014 – from 3.4% to 3.3%, and in 2015 – from 4% to 3.8%. Moreover, the IMF raised the probability of a recession in the euro zone to 40% against 20% in the April forecast. Following the IMF US Energy Information Administration (EIA) has lowered the forecast growth in demand for oil in the world at 100 thousand. Bpd – to 1.24 million barrels.
«The main reason for the fall in oil prices – unauthorized Saudi Arabia’s decision to sell the black gold at a discount. Do not rule out the possibility of collusion, the center of which are the same Saudis » Care oil prices below $ 90 a barrel last week provided Saudi Arabia and Iran. Their actions led to talk about the beginning of a price war among OPEC exporters, providing 40% of the world’s supply of raw materials. Demand is shrinking, so countries are dumping to maintain their market share. First, the media leaked information that Saudi Arabia has reduced the prices of oil in the $ 1.2 to 90.02 dollars per barrel in the November export contracts with Asian countries. Then oil traders told Platts, that the analysis of the futures market gives reason to expect another round of reduction in selling prices from Saudi Arabia – in the range 0,7 – 1 per barrel.
After the Saudis cut prices and Iran – for all contracts with Asia for the supply of raw material in November (82 cents). With the discount November deliveries from Iran will go for as low as 96.44 dollars a barrel – is the largest discount to the quoted market since November 2008.
Tehran is the sharp decline in world oil prices quite profitable, because it will lead to serious problems with balancing the budget. Iran needs to higher oil prices – better than $ 100 a barrel. While Saudi Arabia make up the budget based on the price of $ 98 per barrel, so it can be relatively painless to “sit” with low prices for some time.
«The main reason for the fall in prices oil – unauthorized Saudi Arabia’s decision to sell the black gold discount some consumers from Southeast Asia », – and confirms the director of the analytical department of the IG” Nord-Capital “Vladimir Rozhankovskiy.
He also did not rule out the possibility of collusion, the center of which sees all the same Saudis, “but to prove or disprove the latest version would be extremely difficult – if, of course, does not happen the information leak.” Previously, the newspaper VIEW wrote that ex-Finance Minister Alexei Kudrin said the United States does not rule out collusion with the same Saudi Arabia in the “oil game” against Russia. While there are also other version that the current situation may be conspiring to hit the United States, namely, – on their shale projects that “wallow” at a low cost of black gold.
What to Expect
If prices fall below $ 90 has led to panic in the market. Experts do not hesitate to admit that it is impossible to give a definite prognosis. Thus, the investment fund manager of Templeton Emerging Markets Mark Mobius does not preclude deeper now as prices fall, and the return of quotations to $ 100 per barrel. However, if oil falls to $ 60 per barrel, in any case, for a short while, he said.
Fund Manager Rogers Holdings, Jim Rogers is also at a crossroads: it does not rule out a rise in prices up to $ 100 per barrel by the end of 2014, and the price drop to $ 60 per barrel. “Now I realize that almost anything is possible», – said Rogers.
Russia even before the beginning of the stress scenarios to build a sharp drop in oil prices. The most pessimistic – from the Russian Central Bank, which provides for a reduction to $ 60 per barrel.
Apparently, we expect from OPEC any action until 27 November is not necessary. At the same time, in the heat of controversy decide at this meeting members of the organization, is also not yet clear. Little options: either oil production quotas will be reduced or not.
If OPEC does not reduce the quota, the price of a barrel of Brent crude oil could fall to $ 70, according to Expert Agency Oil and Gas Information “Samotlor Express” Alexander Khurshud. However, this decline will be short-lived, because it will be a cold shower for the oil shale in the United States. Respectively, followed by the decline in drilling and production, which in turn allow prices to go back to $ 100 per barrel.
Rozhankovskiy believes that prices fall below 75 – $ 80 a barrel will not. “The forecast is based on the break-even point shale producers – in the region of 75 – 80 dollars per barrel. If this level is broken, the oil market are big structural changes and dramatic shocks that could lead to a real war already. I think that before that it will not come », – the expert explains.
Grand Capital analyst Yuri Prokudin considers it unlikely fall in oil prices below $ 80. He believes this figure so the threshold for which the step will be unprofitable to most countries – oil exporters. “The United States is no exception: the fall of the cost of even up to 80 dollars a barrel to make the country’s oil projects illiquid, that is unacceptable to the United States», – he said. Therefore, he predicted, before the end of 2014, oil will be traded in the corridor 82 – $ 87 per barrel.
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