Oil Price and US Shales Fate Lies in the hands of MEXICO??

[James Regan + 1,776]

Diplomatic wrangling between Mexico and Saudi Arabia entered a fourth day as neither side was willing to concede, even after President Donald Trump intervened with a compromise and U.S. senators applied pressure to longtime ally Saudi Arabia.

https://www.worldoil.com/news/2020/4/10/opecplus-negotiators-racing-to-finalize-deal-before-markets-open?utm_source=hootsuite&utm_medium=&utm_term=&utm_content=&utm_campaign=

[BLA + 1,666]

43 minutes ago, James Regan said:

Diplomatic wrangling between Mexico and Saudi Arabia entered a fourth day as neither side was willing to concede, even after President Donald Trump intervened with a compromise and U.S. senators applied pressure to longtime ally Saudi Arabia.

"U.S. senators applied pressure to longtime ally Saudi Arabia."

longtime ally ?

That's being awfully generous.

If I may ask why does U.S. shale's fate depend on Mexico ? LOL 

 

Edited April 12, 2020 by BLA

[James Regan + 1,776]

2 hours ago, BLA said:

"U.S. senators applied pressure to longtime ally Saudi Arabia."

longtime ally ?

That's being awfully generous.

If I may ask why does U.S. shale's fate depend on Mexico ? LOL 

 

Let's see in a few hours if your neighbours don't want to play ball.

LOL is just the expected reaction expected from yourself, you couldn't have imagined seeing your senators panhandling Saudi Princes for alms or sadaqua a few months ago.

Something is afoot, Mexico how could they possibly have any affect on a deal that might affect the USA?

Edited April 12, 2020 by James Regan

[BLA + 1,666]

2 hours ago, James Regan said:

Let's see in a few hours if your neighbours don't want to play ball.

LOL is just the expected reaction expected from yourself, you couldn't have imagined seeing your senators panhandling Saudi Princes for alms or sadaqua a few months ago.

Something is afoot, Mexico how could they possibly have any affect on a deal that might affect the USA?

Who's calling the shots ? MBS or Trump ? 

The U.S. Senators don't panhandle. They informed those morons on the Arabian peninsula how this is going to work.  

Mexico affects U.S. ? Please do tell ? Why all the double talk ? Please explain. 

Mexico is not just our neighbor they are our USMCA Trading Partner. They are also a true friend.  Unlike KSA. 

What you don't understand is Mexico set up a hedge the end of 2019/begining of 2020 that pays the the difference between their hedged price (I'm guessing somewhere in the low $50) and the current selling price which today is around $22.  Why would they cut production and sales.  Those U.S. gulf refiners like that heavy crude.

If Trump wants to get WTI up to $85 bbl all he has to do is announce he will be withdrawing U.S. troops and Patriot Anti-Missile Systems from Saudi Arabia.  WTI will be at $85 in a NY minute. 

Brent will also increase but it will be difficult for Aramco to export their oil with all those missiles flying around. 

LOL LOL

PS : were you able to get back your down payment on that waterfront condo in Saudi's City of the Future NEOM ? 

VISION 3030 . .  .  LOL

U.S. Shale will do just fine.

Edited April 12, 2020 by BLA

[James Regan + 1,776]

On Friday, when the deal was in jeopardy, Trump said the U.S. would cut production in an effort to get Mexico “over the barrel.”

At a White House press briefing, Trump said he spoke to Mexico’s President Andrés Manuel López Obrador and had agreed to “pick up some of the slack” by cutting production on behalf of Mexico. He did not elaborate on how the cuts would be enacted, and said Mexico would reimburse the U.S. at a later date. - CNBC

So a deal was struck, lets see how the market reacts in an Hour or less. Short lived spike and then back to low twenties?

[nsdp + 449]

24 minutes ago, James Regan said:

On Friday, when the deal was in jeopardy, Trump said the U.S. would cut production in an effort to get Mexico “over the barrel.”

At a White House press briefing, Trump said he spoke to Mexico’s President Andrés Manuel López Obrador and had agreed to “pick up some of the slack” by cutting production on behalf of Mexico. He did not elaborate on how the cuts would be enacted, and said Mexico would reimburse the U.S. at a later date. - CNBC

 

I rather doubt that the deal struck will have any significant impact.   The present supply demand imbalance is between 25 and 30 million barrels per day.   Ten million barrels doesn't begin to make a difference specially when  you also have to unwind the excess crude positions in storage.  You still have the overhang in storage to get rid of.

[Gerry Maddoux + 3,627]

44 minutes ago, nsdp said:

I rather doubt that the deal struck will have any significant impact. 

Almost none. This is too little, too late, and I pray that our president whips his neck around and slaps a 25% tariff on Saudi oil. This is such a slippery deal--doesn't take effect until May 1, when they will have offloaded millions of barrels and our storage will be logjammed. Expect a little up blip and then free-fall to about $10 WTI. Whoever is advising the president--probably Harold Hamm--is almost certainly drinking scotch right now. This deal is nothing short than a disaster.

[BLA + 1,666]

2 hours ago, James Regan said:

Let's see in a few hours if your neighbours don't want to play ball.

LOL is just the expected reaction expected from yourself, you couldn't have imagined seeing your senators panhandling Saudi Princes for alms or sadaqua a few months ago.

Something is afoot, Mexico how could they possibly have any affect on a deal that might affect the USA?

 .  .  .  .  a few hours later.

Mexico only cuts the 100k they wanted

OPEC  vs  USMCA 

USMCA WINS !

U.S. takes care of their friends.  When will the Saudis ever learn.  Their arrogance is going to be the death of them.

[BLA + 1,666]

15 hours ago, James Regan said:

On Friday, when the deal was in jeopardy, Trump said the U.S. would cut production in an effort to get Mexico “over the barrel.”

At a White House press briefing, Trump said he spoke to Mexico’s President Andrés Manuel López Obrador and had agreed to “pick up some of the slack” by cutting production on behalf of Mexico. He did not elaborate on how the cuts would be enacted, and said Mexico would reimburse the U.S. at a later date. - CNBC

Trump "told" King Salman how the deal will work.  No if's , and's or but's.

Trump took care of Mexico.  U.S. shale producers will voluntarily cut , because they have to and because they can.  They can turn it on or off in a reasonably short timeframe.

The weekly production numbers dropped from 13 mm bbls/day to approx 12 mm bbls/day for the week ending 4/3.  I know those numbers are not perfect but it's a good indication and that's just the start.  THAT'S HOW IT IS ENACTED.

U.S. doesn't expect Mexico to reimburse them at a later date.   Saudis know that, OPEC knows that.  Trump just said it so OPEC could save face.  

Going to be a long tough year for oil. This too will end. 

Maddoux made an excellent point in that "local" is coming back in favor.  I think he may be on to something

 

I think long term you are going to see regional trading partners with all vital industries coming back to these regional trading partners.  Could see (1) Asia/China, (2) Europe, (3) North America (hopefully South America joins) (4) India +

Africa ? China has their Belt and Road claws in Africa.  Be interesting to see if that lasts.

Russia ? Who knows. 

Middle East ? 

Hopefully, the one good thing to come out of this pandemic is the world recognizing China Communist Party for the threat it is.  We can only hope. 

 

 

 

Edited April 13, 2020 by BLA

[0R0 + 6,251]

2 hours ago, nsdp said:

I rather doubt that the deal struck will have any significant impact.   The present supply demand imbalance is between 25 and 30 million barrels per day.   Ten million barrels doesn't begin to make a difference specially when  you also have to unwind the excess crude positions in storage.  You still have the overhang in storage to get rid of.

It is significant in that it doubles the time till storage is saturated, at which point oil prices would be next to 0 at spot and possibly negative. 

[ronwagn + 6,290]

6 hours ago, James Regan said:

Diplomatic wrangling between Mexico and Saudi Arabia entered a fourth day as neither side was willing to concede, even after President Donald Trump intervened with a compromise and U.S. senators applied pressure to longtime ally Saudi Arabia.

https://www.worldoil.com/news/2020/4/10/opecplus-negotiators-racing-to-finalize-deal-before-markets-open?utm_source=hootsuite&utm_medium=&utm_term=&utm_content=&utm_campaign=

https://en.wikipedia.org/wiki/List_of_countries_by_oil_production Mexico is the twelfth largest producer and undoubtedly an importer of oil. It probably exports to us because of our nearby refineries and that is about it. It certainly must be an importer of oil and natural gas from us and others. 

[ronwagn + 6,290]

6 hours ago, BLA said:

"U.S. senators applied pressure to longtime ally Saudi Arabia."

longtime ally ?

That's being awfully generous.

If I may ask why does U.S. shale's fate depend on Mexico ? LOL 

 

How many Americans have been killed by Saudi Arabians compared to how many Americans have they saved? Maybe someone has the figures. I think they have killed more, especially since we need to include Bin Laden and his crew. 

[ronwagn + 6,290]

1 hour ago, 0R0 said:

It is significant in that it doubles the time till storage is saturated, at which point oil prices would be next to 0 at spot and possibly negative. 

Ok, so what will oil cost by the time storage is to a minimum and the economy is mostly back on track in six months? Guestimates please. What will our domestic price be? I am sure that we will have gasoline and diesel one way or the other. Need creates demand. 

Edited April 13, 2020 by ronwagn
spelling

[James Regan + 1,776]

40 minutes ago, ronwagn said:

How many Americans have been killed by Saudi Arabians compared to how many Americans have they saved? Maybe someone has the figures. I think they have killed more, especially since we need to include Bin Laden and his crew. 

Really are you serious?

[ronwagn + 6,290]

Just now, James Regan said:

Really are you serious?

Could you actually reply to the assertion? 

[0R0 + 6,251]

58 minutes ago, BLA said:

I think long term you are going to see regional trading partners with all vital industries coming back to these regional trading partners.  Could see (1) Asia/China, (2) Europe, (3) North America (hopefully South America joins) (4) India +

 

The natural partners are not aged export led societies trading with other aged export led societies. China is in competition with Japan Korea ASEAN locally, They are all complimentary to Indonesia the Philippines and India. They would all benefit from cutting off China. Which they can if they want to. They control the Islands around the S China Sea, All of them. If they wanted to they could blockade China and prevent it from doing business altogether. 

India is equally a partner with ASEAN NAFTA and EU. As it could have been with China if they had not had a half century of dispute and even war. Because of that history there is no future for that trade relationship long term, particularly now that both nations are on a nationalist agenda. 

Europe can regionalize, but it is demographically in competition with the periphery. Only France has a young consumer demographic of size, and it is already leveraged to its eyeballs at 330% of GDP vs. Germany at a bit over 150%. EU must partner with a young demographic in India or Africa. Both are historically possible, but they are in competition with China for Africa. They really can't afford to lose there, or they are forced to go with NAFTA as the only complementary economic region. 

China is not a natural fit to countries that haven't been in a military or territorial dispute with it in the region. Africa is the potential growth market.  It can not be the center of a regional trade arrangement because the consumer demographics are positive only in India Indonesia and Philippines, all of whom have a bad history with Chinese expansionism. Frenemies are not a long lasting basis for complementary trade. China expat industrialists are expanding there, but are not representative of the CCP or policy. 

Europe is demographically doomed as a trading block. It can not go it alone. Even if there were a merging of the block with China, it would be a doomed relationship. They can't all export out of their oversized industrial bases to each other. Drunks don't do well propping each other up. In 10 years at the most, China will entirely dry up as a consumer economy, starting on its way toward halving in size. 

 

[James Regan + 1,776]

17 minutes ago, ronwagn said:

Could you actually reply to the assertion? 

Perhaps they don't trust Americans when you left them high and dry during WW2, to be attacked by the the one of the Axis powers until you realised you needed the oil, and then came running to help. and history continues. Why drag up 9/11 it had zero to do with KSA.

Ask yourself do you have any real interest in the KSA or its history or its people, or if they burn in hell, of course not. So your comments are ridiculous referring to modern events when you should read a little of the culture and history you want to destroy so badly as your own has no real culture as you also managed to destroy most of it.

Arabs are proud of their heritage and culture as you are of your own.....

Edited April 12, 2020 by James Regan

[0R0 + 6,251]

5 minutes ago, James Regan said:

Perhaps they don't trust Americans when you left them high and dry during WW2, to be attacked by the the one of the Axis powers until you realised you needed the oil, and then came running to help. and history continues. Why drag up 9/11 it had zero to do with KSA.

Ask yourself do you have any real interest in the KSA or its history or its people, or if they burn in hell, of course not. So your comments are ridiculous referring to modern events when you should read a little of the culture and history you want to destroy so badly as your own has no real culture as you also managed to destroy most of it.

The relationship with Saudi starts in 1925. They were not at risk in WWII. Though they might have thought they were. 

[0R0 + 6,251]

1 hour ago, BLA said:

Africa ? China has their Belt and Road claws in Africa.  Be interesting to see if that lasts.

 

That is a problem since despite the relationship developing on the industrial side, the African countries are in dire need of food imports, which China can not supply at all. Europe can, the US can. Russia and China together can't as Russia can only feed either China or Africa, not both.  

Both EU and the US would make excellent partners for sub Saharan Africa. Particularly if they can keep Russia out of Ukraine and Poland. EU needs them far more than the US does. 

[0R0 + 6,251]

59 minutes ago, ronwagn said:

Ok, so what will oil cost by the time storage is to a minimum and the economy is mostly back on track in six months? Guestimates please. What will our domestic price be? I am sure that we will gave gasoline and diesel one way or the other. Need creates demand. 

Dec crude is nearly at $36. That would mean the expectation is that the spot price would be appx. $45 by then. 

[ronwagn + 6,290]

17 minutes ago, James Regan said:

Perhaps they don't trust Americans when you left them high and dry during WW2, to be attacked by the the one of the Axis powers until you realised you needed the oil, and then came running to help. and history continues. Why drag up 9/11 it had zero to do with KSA.

Ask yourself do you have any real interest in the KSA or its history or its people, or if they burn in hell, of course not. So your comments are ridiculous referring to modern events when you should read a little of the culture and history you want to destroy so badly as your own has no real culture as you also managed to destroy most of it.

Arabs are proud of their heritage and culture as you are of your own.....

They can be as proud of their culture as they wish to be. I think they have a lot to be proud of and a lot to not be proud of. I think America has a lot more to be proud of and a some things not to be proud of. 

Saudi Arabia still has slavery or a very close virtual slavery in their foreign workers. 

https://www.jihadwatch.org/2019/10/slavery-persists-in-saudi-arabia

https://borgenproject.org/top-15-facts-about-poverty-in-saudi-arabia/

Saudi Arabian royalty has set itself up for a major downfall. It is no ones fault but their own. They have allowed their Muslim fanatics to take over the Muslim masses by pumping much of their money into madrassas ( Muslim schools) in hopes of taking over Africa and whatever other areas they can. The culture of Saudi Arabia does not allow freedom of religion while we in the West do. 

I really don't think you want to continue this argument but if you want to I am happy to. 

[footeab@yahoo.com + 2,190]

20 minutes ago, 0R0 said:

That is a problem since despite the relationship developing on the industrial side, the African countries are in dire need of food imports, which China can not supply at all. Europe can, the US can. Russia and China together can't as Russia can only feed either China or Africa, not both.  

Both EU and the US would make excellent partners for sub Saharan Africa. Particularly if they can keep Russia out of Ukraine and Poland. EU needs them far more than the US does. 

Who can feed Africa?  EU?  Who imports an equivalent area grown equal to that of Germany of Soy?  Right that would be the EU...  So, Hell no the EU can not feed Africa.  EU cannot feed itself currently.  Now if they cut out all meat production, they can at least feed themselves.  Now if you include Ukraine as the EU... I do not.  Ukraine can feed the middle east(already do), but not Africa. 

Sorry, only area that can Feed Africa is improved Ag in Africa, US, Canada, Brazil, Argentina. 

[ronwagn + 6,290]

42 minutes ago, 0R0 said:

The natural partners are not aged export led societies trading with other aged export led societies. China is in competition with Japan Korea ASEAN locally, They are all complimentary to Indonesia the Philippines and India. They would all benefit from cutting off China. Which they can if they want to. They control the Islands around the S China Sea, All of them. If they wanted to they could blockade China and prevent it from doing business altogether. 

India is equally a partner with ASEAN NAFTA and EU. As it could have been with China if they had not had a half century of dispute and even war. Because of that history there is no future for that trade relationship long term, particularly now that both nations are on a nationalist agenda. 

Europe can regionalize, but it is demographically in competition with the periphery. Only France has a young consumer demographic of size, and it is already leveraged to its eyeballs at 330% of GDP vs. Germany at a bit over 150%. EU must partner with a young demographic in India or Africa. Both are historically possible, but they are in competition with China for Africa. They really can't afford to lose there, or they are forced to go with NAFTA as the only complementary economic region. 

China is not a natural fit to countries that haven't been in a military or territorial dispute with it in the region. Africa is the potential growth market.  It can not be the center of a regional trade arrangement because the consumer demographics are positive only in India Indonesia and Philippines, all of whom have a bad history with Chinese expansionism. Frenemies are not a long lasting basis for complementary trade. China expat industrialists are expanding there, but are not representative of the CCP or policy. 

Europe is demographically doomed as a trading block. It can not go it alone. Even if there were a merging of the block with China, it would be a doomed relationship. They can't all export out of their oversized industrial bases to each other. Drunks don't do well propping each other up. In 10 years at the most, China will entirely dry up as a consumer economy, starting on its way toward halving in size. 

 

Please explain why China will dry up as a consumer economy? If China cannot reciprocate with trade it is not a good trade partner so that cannot continue. That is one reason America is at odds with them now. They have expected us to go along with their plans for fast growth. 

[footeab@yahoo.com + 2,190]

12 minutes ago, ronwagn said:

Please explain why China will dry up as a consumer economy? If China cannot reciprocate with trade it is not a good trade partner so that cannot continue. That is one reason America is at odds with them now. They have expected us to go along with their plans for fast growth. 

Actually, I disagree.  But for different reasons.  AFrica is mostly run by Oligarchies, Dictators, Kleptocracies.  They are poor and need cheap goods.  Their industrial base is low, but nat resources are high.  Booming population.  They will trade resources for cheap manufactured goods.  Essentially what they already do.  Now if the US stops giving several countries free food and actually requires resources in return... But, here is the rub, most African countries can partially look at India for how to Grow their food.  Most of Africa has VERY poor Ag practices and why their crop yields are low.  They need fertilizers, pesticides etc.  USA is the cheapest manufacturer of those products... So, one could argue, this will tie them more firmly into the USA's orbit(depending on country of course)  Of course I see this happening more around 2040 or so.  USA has a LOT Of rebuilding of its manufacturing infrastructure and other infrastructure to do.  Over last 3 decades been busy busybodying everyone else's infrastructure and not its own.  Personally I see the USA, for the next ~2 decades telling the entire world to pretty much piss off.  China has an opportunity to get the African supply chain completely in their grasp and I expect them to do so.  The exception?  West Africa which is dependent upon the French who never relinquished their financial empire.  When the French say jump, most countries of west Africa say, "How High?"

[BLA + 1,666]

1 hour ago, 0R0 said:

The natural partners are not aged export led societies trading with other aged export led societies. China is in competition with Japan Korea ASEAN locally, They are all complimentary to Indonesia the Philippines and India. They would all benefit from cutting off China. Which they can if they want to. They control the Islands around the S China Sea, All of them. If they wanted to they could blockade China and prevent it from doing business altogether. 

India is equally a partner with ASEAN NAFTA and EU. As it could have been with China if they had not had a half century of dispute and even war. Because of that history there is no future for that trade relationship long term, particularly now that both nations are on a nationalist agenda. 

Europe can regionalize, but it is demographically in competition with the periphery. Only France has a young consumer demographic of size, and it is already leveraged to its eyeballs at 330% of GDP vs. Germany at a bit over 150%. EU must partner with a young demographic in India or Africa. Both are historically possible, but they are in competition with China for Africa. They really can't afford to lose there, or they are forced to go with NAFTA as the only complementary economic region. 

China is not a natural fit to countries that haven't been in a military or territorial dispute with it in the region. Africa is the potential growth market.  It can not be the center of a regional trade arrangement because the consumer demographics are positive only in India Indonesia and Philippines, all of whom have a bad history with Chinese expansionism. Frenemies are not a long lasting basis for complementary trade. China expat industrialists are expanding there, but are not representative of the CCP or policy. 

Europe is demographically doomed as a trading block. It can not go it alone. Even if there were a merging of the block with China, it would be a doomed relationship. They can't all export out of their oversized industrial bases to each other. Drunks don't do well propping each other up. In 10 years at the most, China will entirely dry up as a consumer economy, starting on its way toward halving in size. 

 

So how long does it take for all this to play out ?

What is your vision of how this ends up ?

Your thoughts are appreciated. 

also the Trans Pacific Trade deal was supposed to unite all participants against China.  It had too many flaws.  Do think a reworked version could get passed by Congress ?