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

[BLA + 1,666]

1 hour ago, James Regan said:

 

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

The truth is MBS squandered decades of Goodwill when he ordered the killing of Kashoggi.

Whether you agreed with it (like you) or not it was a foolish move and cost Saudis dearly. 

Their current attempt to destroy U.S. shale has been met with similar distain. 

KSA has paid $ millions to every Washington Lobbying Firm and Think Tank on K Street.  Maybe they should hire a PR firm. 

[Douglas Buckland + 6,308]

10 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 

 

Because the US shale industry does not operate in a vacuum, regardless of what they think.

[0R0 + 6,251]

29 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. 

China has a boomer heavy population that is approaching or going into retirement. Their millennial generation is a very short spurt followed by a long decline in the size of age cohorts younger than that. That millennial generation driving consumer spending expansion is just too small to maintain the kind of consumption wave the boomers had. Not that they shy away from trying. They have loaded up on consumer debt nearly as badly as Koreans have. To the extent Millennials were driving consumption growth, they have already peaked in first car purchases in 2018 (avg. age 30 in China) and that is  followed by a sharp drop in that cohort. Unlike the official China numbers, used by most demographic projections, the reality is that there are 10-15 million fewer live births this last decade than official stats indicate, Meaning that the projection of the next generation being 240 million vs. the current Millennials at 330 million is rather optimistic and likely to be closer to 220 million. Meaning that all the capacity built to supply Millennials in China will be more than adequate to supply what follows, and 1/3 of it will have to be shut down or used to produce exports. 

They will start saving for retirement at age 40-45 vs. age 40 for their parent's generation as their retirement ages were raised. So the peak in Millennials has about 10 years to go to be 50% at the  saving for retirement phase of life. Their median age is about 32 this year. They are about 5 years older than the US Millennial generation and smaller than the boomers and followed by a significantly smaller Gen Z. US Millennials are a larger group than boomers, and are followed by a Gen Z that is not that much smaller.

In short, China will have to move back to being a 30% export economy or have a large persistent unemployment and income problem. Demographically, the future of China is Spain.

That makes it a problem for OECD or ASEAN as a trade partner. China has less than a decade ahead of some consumption growth, and they have not been managing to keep that going as their Millennials are already leveraged to the hilt. 

[James Regan + 1,776]

3 hours ago, ronwagn said:

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. 

Argument see its in you DNA, you would know if you were arguing with me.

Broad stroke of the brush with the Muslim comment, it's the second biggest religion in the world and growing, how many of them are Arabs? But in your country their all Arabs.....

The culture of Saudi Arabia does not allow freedom of religion while we in the West do - Robert Jeffress, Baptist - Probably want to curtail some of that freedom with radicals also.

Let's agree to disagree I have lived with Arabs being brought up, and I have seen a side of them you have not, so lets leave it at that, you stay with your opinion and I will stay with mine.

Edited April 13, 2020 by James Regan

[0R0 + 6,251]

2 hours ago, BLA said:

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 ?

A revised TTP would be great, but Trump wants one that is "fair" in providing the US a mercantile advantage. Not like the WTO that puts the US at a disadvantage. He wants the trade partners to contribute with military spending or to buy US protection by paying their part in its cost in cash. He wanted $50 billion from Philippines for the reopening of US bases there. President Duterte was shocked. 

China's exports will be hurt by the transition to regional supply chains specifically designed to duplicate China production. That will occur while their consumption flattens out (what just started 2 years ago) and then heads down. After that, expect fewer attempts at credit driven expansion, as the Chinese stimulus over the past decade has already produced a tripling of total debt while the resulting growth has shifted to government infrastructure projects. Chinese stimulus ranged from 8% to 12% of GDP in each of the years of the past decade. That means that its natural growth since 2014, netting out stimulus has been near 0 and -2% in 2019. If they don't manage further stimulus then their economy will "grow" at between -2% and +2% annually  for the decade till their financial system implodes when it becomes cash flow negative with more retirees cashing out than contributing. When exactly I can't tell yet, but between 2025 and 2030, most likely 2028 before the CV19, after, it might be anytime.  The impact of the CV19 outbreak may cause the credit system to collapse entirely even while food inflation runs rampant (now 20%), $4/lb for pork shoulder anyone?  It's a bargain...

Faced with limited stimulus capacity, unable to extend monetary stimulus without generating further food inflation (the stuff of riots), and with a flattening and declining consumer demand, China will see a decline in foreign orders, and an end to outsourcing by international companies into China. China exports will likely fall by at least 1/3 by 2025, starting with a minimal recovery out of the CV19 quarantine crisis. 

First to shoot, Japan

https://www.scmp.com/news/asia/east-asia/article/3079126/japan-pay-firms-leave-china-relocate-production-elsewhere-part

 

The Chinese are well aware that they can't do any more of this credit expansion. The Baoshang bank failure fiasco showed what it would do, the initial haircut for depositors was 30%, which they had to subsidize to lower it to 10%. It sent their repo markets into chaos that spilled over to the dollar market, that could no longer fill the hole that China banking had sucked from it, and was met by the Fed unwilling to plug it till the markets blew apart in the US.  This year's recovery efforts allow the CCP cover to print up money and cause inflation while blaming the disease for it. Watch their money supply data, if they ever publish and M2 figure again.Last was 200% of GDP, vs US at 70% of GDP and Euro at 80% of Euro zone GDP. 

[BLA + 1,666]

1 hour ago, Douglas Buckland said:

Because the US shale industry does not operate in a vacuum, regardless of what they think.

So how does Mexico specifically  affect the fate of U.S. shale.  I honestly don't understand the answer. 

[Douglas Buckland + 6,308]

6 minutes ago, BLA said:

So how does Mexico specifically  affect the fate of U.S. shale.  I honestly don't understand the answer. 

Because, if you’ve been paying attention, the recently proposed OPEC production cut required Mexico to agree to a certain cut. If they did not, the entire production cut would have been scraped and we were back to square one.

Regardless if the Opec++ cut is worthwhile or not, this would directly impact the shale operators, to some extent, either now or in the future.

As I said, the shale industry does not operated in a vacuum...and never has.

Does that answer your question?

[James Regan + 1,776]

13 minutes ago, BLA said:

So how does Mexico specifically  affect the fate of U.S. shale.  I honestly don't understand the answer. 

The LTO sector is hanging by a thread and a measly 100K/Bbls and OPEC have shown to be able to destabilise the cartel that controls world oil prices, its not a hard concept to fathom out unless you're on the pointy end and cannot see it. The job has been done by OPEC+, now a piss ant concession of 10Million bb/s has saved face for the Cartel and Trump, we will be seeing this discussion again very soon 10MBbls is a tea cup.

Edited April 13, 2020 by James Regan

[BLA + 1,666]

2 minutes ago, Douglas Buckland said:

Because, if you’ve been paying attention, the recently proposed OPEC production cut required Mexico to agree to a certain cut. If they did not, the entire production cut would have been scraped and we were back to square one.

Regardless if the Opec++ cut is worthwhile or not, this would directly impact the shale operators, to some extent, either now or in the future.

As I said, the shale industry does not operated in a vacuum...and never has.

Does that answer your question?

The Mexicans did not cut the 400k Saudis wanted.  They cut the deal anyway at 9.7 mm .

The cut is all show no substance.  

Respectfully disagree with your opinion.

We get a little bump in price now.  Will be lower by the end of the week , probably much sooner.

[ronwagn + 6,290]

53 minutes ago, James Regan said:

Argument see its in you DNA, you would know if you were arguing with me.

Broad stroke of the brush with the Muslim comment, it's the second biggest religion in the world and growing, how many of them are Arabs? But in your country their all Arabs.....

The culture of Saudi Arabia does not allow freedom of religion while we in the West do - Robert Jeffress, Baptist - Probably want to curtail some of that freedom with radicals also.

Let's agree to disagree I have lived with Arabs being brought up, and I have seen a side of them you have not, so lets leave it at that, you stay with your opinion and I will stay with mine.

I have worked with a lot of Muslim physicians and had no issues with them. They do have a problem with dealing with women as equals, in my experience. I am a devout Christian so have issues with anyone who would not allow me or anyone to not practice their religion in the "Muslim World". Yet some have trouble saying that America is a Christian Nation although we allow total freedom of religion, atheism, or whatever. 

One thing about Muslims, they do not put up (openly) with a lot of the activities our culture indulges in openly. That is a plus IMO.

The Salafists have run out the Sufis to a great extent or sent them underground. The Sufis are much closer to my belief system. The Indian Sikhs or Vedanta sect and Zen Buddhists also. 

https://en.wikipedia.org/wiki/Sufi–Salafi_relations

 

 

Edited April 13, 2020 by ronwagn
addition

[BLA + 1,666]

24 minutes ago, James Regan said:

The LTO sector is hanging by a thread and a measly 100K/Bbls and OPEC have shown to be able to destabilise the cartel that controls world oil prices, its not a hard concept to fathom out unless you're on the pointy end and cannot see it. The job has been done by OPEC+, now a piss ant concession of 10Million bb/s has saved face for the Cartel and Trump, we will be seeing this discussion again very soon 10MBbls is a tea cup.

No 10 mm cut is going to support prices when demand destruction is 20 to 30 mm.  

There you go with your pointy end comments again.  

Mexico's cuts have no contribution whether 100k , 400k or even if they did 1mm. Production cuts are a con. If you want to control the supply side of the equation cut exports.  Saudi Arabia will continue to dump all the oil they put in storage tank farms and tamer fleets around the world. 

You were wrong .  Our neighbor did not cave to Saudi extortion.

You were wrong. Our Senators did not panhandle. Quite the opposite. 

U.S. shale is not hanging by a thread. Over leveraged mismanaged companies are.

Shale will ride it out.  Chevron budgeted $4 billion for the Permian this year.  They cut that to $2 billion last week.  More cash to buy defaulted shale companies. 

Shale production could drop 3 mm bbls /day this year.  Landowners royalty checks won't be as big this year.  This will pass. 

It's been said 100 times.  Shale companies can go away , but the rock is still there.  

Shale will live on stronger than ever.

 

Edited April 13, 2020 by BLA

[Douglas Buckland + 6,308]

18 minutes ago, BLA said:

The Mexicans did not cut the 400k Saudis wanted.  They cut the deal anyway at 9.7 mm .

The cut is all show no substance.  

Respectfully disagree with your opinion.

We get a little bump in price now.  Will be lower by the end of the week , probably much sooner.

Your question was how does Mexico, in relation to the OPEC++ proposed production cut, affect the shale oil operators.

I answered the question, it was not an opinion for to agree to or not. If you somehow disagree with my logic, please point out my error.

[James Regan + 1,776]

38 minutes ago, BLA said:

We get a little bump in price now.  Will be lower by the end of the week , probably much sooner.

Please elaborate, especially the "Probably" get out of jail card.

You're reading too much contradicting media and sounding like you will be soon writing for OP.

[BLA + 1,666]

18 hours ago, Douglas Buckland said:

Your question was how does Mexico, in relation to the OPEC++ proposed production cut, affect the shale oil operators.

I answered the question, it was not an opinion for to agree to or not. If you somehow disagree with my logic, please point out my error.

James stated the fate of U.S. Shale is in the hands of Mexico.  I couldn't disagree more.  I don't understand. 

Just my opinion.  

Actually Pemex buys a lot of U.S. light oil and condensate to cut their heavy oil .  The more barrels they sell the more U.S. shale sells to them.  

Additionally , now that Trump has Chevron out of Venezuela their exports have dried up.  Mexico is starting to sell their heavy oil to U.S. at great price and making a killing because the hedged at prices up in the $50's.

Mexico's very happy.

U.S. Shale is very happy.

U.S Gulf of Mexico refiners are very happy.

Saudis , OPEC and James not so happy.  

Edited April 13, 2020 by BLA

[BLA + 1,666]

Just now, James Regan said:

Please elaborate, especially the "Probably" get out of jail card.

You're reading too much contradicting media and sounding like you will be soon writing for OP.

Writing for OP ?

That's it. I'm outta hear. 

Good comeback. 

[James Regan + 1,776]

1 minute ago, BLA said:

Writing for OP ?

That's it. I'm outta hear. 

Good comeback. 

Sleep well and we can start again another time.

Cheers

James Abu Regan

Edited April 13, 2020 by James Regan

[Douglas Buckland + 6,308]

27 minutes ago, BLA said:

James stated the fate if U.S. Shale is in the hands of Mexico.  I couldn't disagree more.  I don't understand. 

Just my opinion.  

Actually Pemex buys a lot of U.S. light oil and condensate to cut their heavy oil .  The more barrels they sell the more U.S. shale sells to them.  

Additionally , now that Trump has Chevron out of Venezuela their exports have dried up.  Mexico is starting to sell their heavy oil to U.S. at great price and making a killing because the hedged at prices up in the $50's.

Mexico's very happy.

U.S. Shale is very happy.

U.S Gulf of Mexico refiners are very happy.

Saudis , OPEC and James not so happy.  

Then perhaps you should have addressed your question to James directly, as opposed to broadcasting it and then disagreeing with the replies.

I, myself, do not understand @James Regan‘s reasoning, and I am fairly sure that most psychologists would not as well!😂 

[James Regan + 1,776]

1 hour ago, Douglas Buckland said:

Then perhaps you should have addressed your question to James directly, as opposed to broadcasting it and then disagreeing with the replies.

I, myself, do not understand @James Regan‘s reasoning, and I am fairly sure that most psychologists would not as well!😂 

Mr reasoning is becoming deluded each day (isolation may be affecting me). I just don't get the bashing the Saudis get from the Gringos. Especially as it involves death and bombs and going to Hell etc. Nothing positive can they not be grateful for all they are doing to help the USA. Maybe it comes from lack of sympathy for a delinquent sector which is being propped up by said Cartel. 

Perhaps the message and fate has been sealed for LTO, perhaps now the 50 cent piss ants will disappear and natural selection will take care of those who should have been out of business a while ago, and we can get live in harmony, with a sector who acts responsibly especially as its affecting the rest of the world not just the USA.

Free market should have its own checks and balances to protect the investors in the market, not bullshit loans which we saw in last financial meltdown where people lost their homes and were put on the streets, not fat cats who will get a bail out or have robbed enough to default and still live comfortably.

I maybe wear my heart on my sleeve also for this oilfield.

Edited April 13, 2020 by James Regan

[James Regan + 1,776]

The position of the USA is critical, as OPEC+ has stated before, but the Trump Administration’s standpoint of voluntarily production cuts by its US based producers is non-functional. Without real cuts in US shale, the main culprit behind the current volatile global market, no deal will even survive the next weeks. Washington’s offer to buy US shale volumes for its SPR is only supporting shale, not the market in reality. It is a protectionist government statement with as only target to support the fledgling shale oil production owners. The market should however still see it as additional production to be taken out of the global market in due course.

https://berrycommodities.com/opec-g20-meeting-outcome-increases-instability-in-the-oil-market/

Already meandering down to pre cut levels, three weeks more until the cuts kick in but the market is already in only hours after the meeting returning to the same pre cut price. The US MUST make a real deleiberate cut and announce it, not hide behind smoke and mirrors, unfortunately this stance will not last until the elections. 

 

[Dan Warnick + 6,100]

15 hours ago, BLA said:

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. 

Agree with you there.  Knowing how Donald likes to push certain group's buttons, I think it would be great for him to mutter that in front of the press corps.  😁😁😁  Hell, all the players may appreciate it too, for the short term spike in prices!  LOL!  You've got to love oil.

[BLA + 1,666]

13 hours ago, ronwagn said:

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. 

Mexico is a huge importer of our natural gas and imports sizable qty of light oil to mix with their heavy oil. 

Also, Mexico sends oil to U.S. for refining that returns to Mexico in the form of gasoline, diesel and aviation fuel.  The new Mex President recently approved Mexico building a mega refinery in Mexico costing billions.  Probably a bad investment.

Edited April 13, 2020 by BLA

[Geoff Guenther + 317]

57 minutes ago, BLA said:

Mexico is a huge importer of our natural gas and imports sizable qty of light oil to mix with their heavy oil. 

Also, Mexico sends oil to U.S. for refining that returns to Mexico in the form of gasoline, diesel and aviation fuel.  The new Mex President recently approved Mexico building a mega refinery in Mexico costing billions.  Probably a bad investment.

This is really where Mexico should understand supply and demand. You don't need to be self-sufficient in refineries when the world is awash in them. Invest in something that will make money rather than competing in a saturated market.

[Jie Ling 0]

yOUR FORGETTING ONE THING IN THE AFRICA FOOD ISSUE

WATER, NOT TODAY, BUT BEFORE TOMORROW, IT WILL COME,

OIL/POWER IS WATER AND WATER IS OIL/POWER IN THE FOOD EQUATION

Edited April 13, 2020 by Jie Ling

[JoMack + 549]

Did Trump promise Mexico that the U.S. would cut production by 400,000 bbls a day if Mexico did the same.  Agreement apparently hinged on this?  Looks like crude oil production dropped 600,000 bbls a day from March 27 to April 3, 2020.   This was the industry slowing production naturally, but what happens when the country is back and running at full force.  Trying to stabilize the oil markets after all the deals, cheating, U.S. oil company bankruptcies, drawdowns of storage, increasing supply without demand info, will be a raucous year or more for crude.  No one will be able to control what happens and nothing can be tied to what happens to crude supply or prices when all producing nations try to capture their market share.  

[Gerry Maddoux + 3,627]

10 hours ago, BLA said:

So how does Mexico specifically  affect the fate of U.S. shale.  I honestly don't understand the answer. 

Part of it likely has to do with Mexico's 50% ownership in the Deer Park Refinery, which is just across the Houston Shipping Channel. Mexico made an atypically shrewd investment in that facility for $1B back in 1993, agreeing to supply Shell--its unlikely JV partner--with a certain amount of Maya heavy/sour for thirty years. That has been a good relationship for both parties, but the amount of Maya feedstock goes down to a third of its 30-year supply, in about 2023, under terms of the agreement. 

Mexico's president is determined to grow Mexico's oil industry . . . hell or high water. Completion of the new Pemex refinery coincides precisely when the JV agreement with Shell reduces Maya feedstock, so Mexico will suddenly (2023) have abundant Maya to supply their new refinery, even if they are unable to grow production much at all in the interim. 

This determination is probably a good thing for the US, as Pemex is going to need LTO to blend with Maya, and they will become even bigger buyers of natural gas too (Richard Kinder is addressing this on a minute-to-minute basis). Anyway, that's a convoluted answer to a convoluted agreement hatched way back in 1993 and winding down 30 years later. 

Mexico saw this latest OPEC+ thing as a chance to flex muscle that they really don't have yet--but it's coming. As Douglas says, shale does not exist in a vacuum, and the Mexico/Shell Deer Park JV shows that in spades. Mexico realizes that if they can grow their production, they will need a whole lot of LTO from the US. In other words, they were trying to make a statement.