IT IS FINISHED. OPEC Victorious

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On 12/8/2018 at 4:19 AM, William Edwards said:

Futures traders are in control. And they care not whether prices are high, or low. Just that they move. But down will work as fine as up, thank you!

This is a fundamental foundation of the pricing for the entire global oil & gas industry.  Which usually seems to be either forgotten or ignored.

Thank you @William Edwards for the gentle reminder.

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I disagree. Imo traders can only control the price short term, in the long term OPEC and regular supply  and demand plays a much bigger part.

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57 minutes ago, Jon#2 said:

I disagree. Imo traders can only control the price short term, in the long term OPEC and regular supply  and demand plays a much bigger part.

Only if those prices are in the $20's and $30's.  

Is that right, @William Edwards?

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1 hour ago, Jon#2 said:

I disagree. Imo traders can only control the price short term, in the long term OPEC and regular supply  and demand plays a much bigger part.

Actually, Jon, you did not completely disagree. As I see it, you added an element, but you also misstated one as well. The day-to-day price is set by traders. Over time, the resulting price levels determine the demand and supply activities, thus accommodating the price averages resulting from the traders' action. OPEC is usually simply a follower, not a prime mover.

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43 minutes ago, Dan Warnick said:

Only if those prices are in the $20's and $30's.  

Is that right, @William Edwards?

I agree, Dan, that OPEC only kicks in in a meaningful way when prices are desperately low. At that point, their only meaningful lever, restraining supply, can be effective in controlling the traders' activities. $20's or maybe $30's will do it.

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On 12/8/2018 at 11:54 AM, specinho said:

uuhhhh....... pardon me..... but isn't the key concept in the modern society is putting the incompetent in-charge so that more can be wasted?? ^_^

I believe what you are describing is what is called the  "PETER PRINCIPLE."

The Peter Principle states,  if i recall,  THAT PEOPLE TEND TO RISE TO THEIR LEVEL OF INCOMPETENCE,  AND THEN RISE NO FURTHER,  BUT NOT BE FIRED.

The result is that most jobs (particularly in Government) are occupied by incompetent employees,  and that the "assistants" (or those one level lower) are the onces that actually get things done.

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23 hours ago, mthebold said:

Those are just the figureheads.  Policy is fed to them by people who prefer to remain anonymous, that being safer. 

Let's not preach "Confusionism"...... We are all Simpletonians........ People are appointed for a reason........ right?? for the better or for worse.......... that's the question? 9_9

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On 12/7/2018 at 7:00 PM, shadowkin said:

What gives the US leverage over Saudi, thus OPEC, is not one particular arms deal. It is that no matter how many billions of dollars worth of weapons Saudi buys from the US they haven't a clue how to effectively fight a conventional war with sophisticated weapons. It is as Trump said they wouldn't last 2 weeks without the US. The timing may be an exaggeration but the outcome is not. The weak in the ME are slaughtered.

That's why Saudi 'invited' in 500,000+ US troops for Gulf War I. As Arabs go Saudis are particularly averse to anything that smacks of work. Why do you think they import so many foreigners to do it for them. Why do you think they were making noise about a muslim NATO which they expected Pak to do all the heavy lifting i.e. the fighting and dying?

Trump isn't the first US president to threaten Saudi and he won't be the last. He's just the latest to verbalize what is implicitly understood by all.

 

This is true.

Several decades ago,  one of my Brothers was the Pentagon's Liaison Officer to the Saudi's as regards anything having to do with maintaining the fleet of AWAC's aircraft that we had sold the Saudi's.

The Saudi's desperately wanted the AWAC's and their capabilities,  but neither they,  nor their military were really interested in running the operations of the aircraft in any way, shape or form.

So they just paid Americans to do everything.

Trump is right.   Without the USA,  the Saudi's might last a few weeks to months.

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8 minutes ago, Illurion said:

I believe what you are describing is what is called the  "PETER PRINCIPLE."

The Peter Principle states,  if i recall,  THAT PEOPLE TEND TO RISE TO THEIR LEVEL OF INCOMPETENCE,  AND THEN RISE NO FURTHER,  BUT NOT BE FIRED.

The result is that most jobs (particularly in Government) are occupied by incompetent employees,  and that the "assistants" (or those one level lower) are the onces that actually get things done.

uuhhh...... thank you for the enlightenment Illurion. That principle really fires up the incompetents I believe...... we would interprete it as "it's ok to be incompetent. One will not get fired but might rise because other incompetents are worse off".....  Raibowy dewdrop - right place right time with the right people to shine colorfully......................... despite being imbeciles......... thank you xD

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(edited)

Quote

What gives the US leverage over Saudi, thus OPEC, is not one particular arms deal. It is that no matter how many billions of dollars worth of weapons Saudi buys from the US they haven't a clue how to effectively fight a conventional war with sophisticated weapons. It is as Trump said they wouldn't last 2 weeks without the US. The timing may be an exaggeration but the outcome is not. The weak in the ME are slaughtered.

That's why Saudi 'invited' in 500,000+ US troops for Gulf War I. As Arabs go Saudis are particularly averse to anything that smacks of work. Why do you think they import so many foreigners to do it for them. Why do you think they were making noise about a muslim NATO which they expected Pak to do all the heavy lifting i.e. the fighting and dying?

Trump isn't the first US president to threaten Saudi and he won't be the last. He's just the latest to verbalize what is implicitly understood by all.

 

This is true.

Several decades ago,  one of my Brothers was the Pentagon's Liaison Officer to the Saudi's as regards anything having to do with maintaining the fleet of AWAC's aircraft that we had sold the Saudi's.

The Saudi's desperately wanted the AWAC's and their capabilities,  but neither they,  nor their military were really interested in running the operations of the aircraft in any way, shape or form.

So they just paid Americans to do everything.

Trump is right.   Without the USA,  the Saudi's might last a few weeks to months.

 

uuhhh........ let's be reminded that dessert might have different combat strategies than most areas. For examples - they might fight at night when the temperature is not crematingly hot and when lights of the targets are on; tanker needs fuel and might sink in the dessert and camels might be more reliable; the dessert attire caught wind easily - their eyes might be covered by clothe as the wind blows and that causes them to miss aim(s) when it matters (let's not mentioned some muslim majority countries who have had soldiers sent in combating in their bathrobs while the battle was on). In addition - to fire sophisticated and expensive things at the same time making sure they are not backfiring at own camp is a skill that requiring reading manual instructions on the spot quickly-accurately-react properly (general practices with those aiming at nothing would be too costly or no??).... etc etc....... 

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3 hours ago, mthebold said:

What are the odds that SA seeks support from Russia or China instead of the US?

I’d wager high and already in the works, with Russia.  

We all but abdicated our strength in the ME under Obozo, settling instead for promises of rainbow and butterfly nuclear agreements.  Meanwhile Putin cozied up in Syria, and increasingly with Iran and Turkey.

Thats why dealing with Saudi on the Khashoggi issue is, well, complicated.  We aren’t the only military world power willing to sell arms to Saudi and have a physical presence in the kingdom.

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2 minutes ago, mthebold said:

lol.  I keep hearing that Obama dropped the ball on foreign policy.  Peter Zeihan suggests that Obozo had neither a clue nor the desire to learn - but he sounded good.  Do you have any thoughts on specific foreign policy actions Obama took? 

😂, well, his red-line moment in Syria comes to mind........  Let’s see, his world apology tour.  Telling Medvedev he’d have, “More flexibility after the election” in 2012.  Trading scumbag terrorists for traitorous Americans.  How’s that for a start.  Sending Billions in cash to the Mullahs in Iran.  How’s that for a start.

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On ‎12‎/‎8‎/‎2018 at 3:17 PM, Dan Warnick said:

Hi Osama.  Others on here have pretty much declared SaudiVision 2030 dead before it even got started.  They may wish to jump back in and I hope they do, but it would seem that the dream of SaudiVision 2030 has never been further from reality than it is today.

I will agree with your point...but even if they have such plans...that should be enough to act as a reminder.

 

P.S:

Oil prices still down---we might re-think if OPEC was/is victorious.

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On 12/10/2018 at 6:22 AM, mthebold said:

lol.  I keep hearing that Obama dropped the ball on foreign policy.  Peter Zeihan suggests that Obozo had neither a clue nor the desire to learn - but he sounded good.  Do you have any thoughts on specific foreign policy actions Obama took? 

Another excellent Peter Zeihan presentation.  He is very confident in his projections and I don't hear the clatter of disagreement one would expect if he's full of ... it.  In any case, thanks for bring that to my attention, it was a good one.

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On 12/11/2018 at 11:28 AM, Osama said:

I will agree with your point...but even if they have such plans...that should be enough to act as a reminder.

 

P.S:

Oil prices still down---we might re-think if OPEC was/is victorious.

Any OPEC decisions and/or actions will have a delayed effect, so by the time we see them play out, we may have already forgotten about this time and these discussions.  Difficult task to keep "oil reaction delays" in mind as they mature.  We'll keep trying.

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2 hours ago, mthebold said:

This was my first exposure to him.  Do you recommend others?

Oh yes.  I don't remember if it was me that introduced his presentations to the forum or if it was another member.  I think he started out doing these for the DOD and other parts of the D.C. community and then branched out.  Don't remember the thread now.  Just search on his name on YouTube and you'll find many others.  Including WW III and end of days stuff.  He really does tie together geopolitics like nobody else.

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On 12/9/2018 at 1:37 PM, TXPower said:

😂, well, his red-line moment in Syria comes to mind........  Let’s see, his world apology tour.  Telling Medvedev he’d have, “More flexibility after the election” in 2012.  Trading scumbag terrorists for traitorous Americans.  How’s that for a start.  Sending Billions in cash to the Mullahs in Iran.  How’s that for a start.

He stood by as Russia annexed Crimea. There are whispers he actually told the Ukrainians not to do anything. He did nothing as China built their islands in the South China Sea. The man was weak. The North Koreans openly mocked him as a wicked black monkey. The Russians did the same. In fairness he did what he said he'd do -  'lead' from behind.

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On 12/7/2018 at 11:34 AM, Jan van Eck said:

Here is the problem:  you can have (and it seems to be that these basins do have) vast lakes of oil and gas out there, but if you do not have the infrastructure to haul the stuff out and get it to some refinery customer who can pay you hard cash for it, then the oil might as well be sitting on the Planet Mars.  

Oil and gas are no good to anybody if you cannot take it to port.  

They are working on that problem, pipelines are going to be expanded and in the meantime the railroads are saying they have rail cars to ship oil with for now, so the biggest hurdle would be to get the oil from the well to the rail cars for shipment? 

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6 minutes ago, SERWIN said:

They are working on that problem, pipelines are going to be expanded and in the meantime the railroads are saying they have rail cars to ship oil with for now, so the biggest hurdle would be to get the oil from the well to the rail cars for shipment? 

Yup, you are correct.  And since these are freight trains, the trackage could be laid as "temporary rail," which are 80-foot sections of completed rail, i.e. two rails already connected to the ties, assembled in a factory and brought on-site by flatcar, then lowered into place by a crane. and lowered onto the gravel bed, then bolted together with flange plates.  The train would move, albeit slowly, over the temporary rail, but if you can get the land permits, then the rail siding can be brought right to the drill field.  When the pipeline is finished, then the temporary rail can be dismantled, and even the gravel scooped up for re-use elsewhere. 

You can bet that the pipe and rail guys are working flat-out to get those wells hooked up.  They can all smell the money!

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On ‎12‎/‎9‎/‎2018 at 3:59 PM, Jon#2 said:

I disagree. Imo traders can only control the price short term, in the long term OPEC and regular supply  and demand plays a much bigger part.

Now that traders have had their fun for a couple of months, fundamentals will kick in and we will see $70+ in no time. And we will probably see them overshoot the "balanced price" this time around aswell. I wont be surprised if we end up above $100 within a year or two.

 

I am talking of brent of course. I think WTI will stay lower and US customers will continue to get their cheap gasoline, unless shale oil finally implodes that is :)

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On 12/7/2018 at 12:37 PM, Guillaume Albasini said:

From the official OPEC Press Release :

"The 5th OPEC and non-OPEC Ministerial Meeting, following deliberations on the immediate oil market prospects and in view of a growing imbalance between global oil supply and demand in 2019, hereby decided to adjust the overall production by 1.2 mb/d, effective as of January 2019 for an initial period of six months. The contributions from OPEC and the voluntary contributions from non-OPEC participating countries of the ‘Declaration of Cooperation’ will correspond to 0.8 mb/d (2.5%), and 0.4 mb/d (2.0%), respectively. "

Market first reaction is a rising oil price, the agreement reached being a better result than absence of agreement some were expecting. But a 1.2 mb/d reduction is a rather modest achievement. I'm not sure the bulls will go very far on this.

I agree.

In the big picture,  it is not a lot of oil,  and the fact that they are not listing a "who" breakdown means that there will be no way to determine whether they actually perform the cuts...

This is just a pr stunt.

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On 12/7/2018 at 6:43 PM, Rodent said:

indeed I shall. I mean, I'm sure I'll forget if left unattended, so please do remind.

it is your impression that prices won't hold even if they curb production? (all other things being equal of course) 

I missed the live stream, buried in other writing endeavors, but I would have LOVED to watch this live! interesting how body language, tone, and facial expressions add another layer of understanding. they say communication is 93 percent nonverbal!

A good question. However, prices haven’t seemed to hold over the last 3-4 years, regardless of cuts

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26 minutes ago, Ian Austin said:

A good question. However, prices haven’t seemed to hold over the last 3-4 years, regardless of cuts

and I would just like to remind everyone including @William Edwards that I have a few more weeks before I have to assess where prices are compared to what we thought would happen after the OPEC agreement. I'm not eating crow just yet. prices are on the move upward again. we shall see. I did fantastically come in way way over on the great oil price challenge. so disappointing.....

 

 

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