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Oil Price Could Fall To $30 If Global Deal Not Extended

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Russian Energy Minister Alexander Novak said on Monday he could not rule out a scenario in which oil prices could fall to $30 per barrel if the global oil deal was not extended. Novak said there were big risks of oversupply on the market and that Moscow needed to monitor the oil market more in order to be able to take a balanced decision in July. Saudi Energy Minister Khalid al-Falih, who was in Moscow for talks with his Russian counterpart, said steps were being taken to prevent a sharp fall in oil prices.

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In that case, please no deal :)

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Take profit and exit..

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The average U.S. price for a gallon of regular gas stands at $2.76

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Key word... "could be", but on the end already known scenario "will not be...

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It would be nice to happen. No more money for nothing and Ukrainian sluts for free for Saudis in Bahrain.  Looking forwards to see that.

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Why is oil price falling to $30/bbl an issue?

Why are nations being destabilized, leaders eliminated and humans reduced to base existence (Venezuela, Iran, Libya...) just to prop up the price of oil?

Can't this commodity be allowed to obey the rules of market forces like other commodities so it can find it's natural price level?

 

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2 hours ago, Uduak said:

Why is oil price falling to $30/bbl an issue?

Why are nations being destabilized, leaders eliminated and humans reduced to base existence (Venezuela, Iran, Libya...) just to prop up the price of oil?

Can't this commodity be allowed to obey the rules of market forces like other commodities so it can find it's natural price level?

Just what commodity follows market forces again?  None, except INSIDE a nation or federation of nations.  Take off the utopia glasses man.  This is a lie fed to everyone when the WTO was signed. 

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The idea that gas will not keep going up is ludicrous. The same scientists who predict that the global warming will bake and drown us all and over population will have us all eating Soylent Green, show their models that we are at peak oil and will soon rely on wood burning stoves to keep from freezing to death. Computer models can never be wrong. 

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On 6/10/2019 at 7:10 AM, Pavel said:

The average U.S. price for a gallon of regular gas stands at $2.76

Add $1.00 for us in CA.

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46 minutes ago, BenFranklin'sSpectacles said:

I feel like looking at this through an idealistic lens: 

When a nation adopts dangerous ideas, it's safer for the world to destroy that nation than to let the infection spread.  Thus, nations aren't being destabilized to prop up the price of oil.  They're being destabilized to prevent violent ideas (Iran) and economically unsound ideas (Venezuela) from infecting other nations.  This works partly because it strips dangerous nations of the resources they need to spread their ideas and partly because it makes an example of them. 

Most of the Middle East is an obvious example of dangerous ideas.  They export violence, oppression of women, etc.  That's not acceptable.  Venezuela is a more subtle case.  Their sin was socialism: stripping resources from the producers of society to give it to unproductive people.  This is dangerous because, in the long run, it destroys the economy, plunging everyone into destitution.  Unfortunately, citizens of developed nations looked at Venezuela's short-term success and thought, "I want free stuff too!"  The dangerous idea was spreading.  Thus, the safest course of action is to accelerate Venezuela's inevitable demise.  If Venezuela doesn't appear successful, then there's no reason to mimic their behavior. 

There's also the issue of OPEC, which intentionally manipulates markets.  If the problem is that governments are manipulating markets, then the solution is to replace those governments.  If The People don't like the resulting death, disease, and destruction, then they shouldn't have supported market manipulation.  Better to have a few suffer today than to have everyone suffer later. 

Conveniently, many dangerous nations rely on oil revenues.  Increasing oil prices has the short-term effect of enriching these nations, but the long-term effect of destroying them.  As they become dependent on oil revenues, high prices allowed unconventional oil producers to invest in R&D, which drove down the cost of unconventional oil, which allows unconventional oil to replace conventional oil from dangerous nations, which eliminates those nations' revenue streams.  These dangerous nations are now wholly dependent on oil revenue even as they're being stripped of that revenue.  Problem solved. 

On a more abstract level, the problem is that some people can't manage resources.  They consume everything they're given, fall into destitution, and then complain bitterly that it was Someone Else's fault.  These people destroy everything they touch.  They are dangerous and cannot be allowed to infect others.  Thus, they must be made into examples. 

Looks like it was extracted from the neocon agenda book, Project for the New American Century.  The only ideas that matter to them are theirs but of course that's the way it is everywhere else.  The domino theory was discredited a long time ago but some people still cling to such foolishness and apparently it leaks out here too.

The US manipulates it's markets and the free stuff, OPM, goes to the managers and manipulators of those markets. It's the same game with a different title.  I hope you really don't believe this drivel but since there is no /sarc I can't really tell.

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1 hour ago, wrs said:

Looks like it was extracted from the neocon agenda book, Project for the New American Century.  The only ideas that matter to them are theirs but of course that's the way it is everywhere else.  The domino theory was discredited a long time ago but some people still cling to such foolishness and apparently it leaks out here too.

The US manipulates it's markets and the free stuff, OPM, goes to the managers and manipulators of those markets. It's the same game with a different title.  I hope you really don't believe this drivel but since there is no /sarc I can't really tell.

I've never read an agenda book for anything, and I don't know what neocons are. 

What I do know is that I've spent most of my life surrounded by leeches.  I've seen what resource mismanagement does to people.  I've seen what socialist ideas do to communities.  I view those ideas as incredibly dangerous, not because someone told me they were dangerous, but because I studied what's necessary to maintain civilization. 

Maybe I'm wrong about the motivation behind destroying these nations.  I'm sure there are other possibilities.  I do hope, however, that whoever is in charge is trying to keep the system functioning. 

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OK, so the price of oil drops down to 30$/bbl, its  not like it hasnt happened before, and not that  it wont happen again. Its like the 4 seasons for most people (maybe two for some),

It maybe a blessing in disguise, clean up the industry mess, get rid of whiny folks, and streamline the entire industry and perhaps many many economies of the world and many many many industries that are bloated and running amok.

It could hurt a lot of people but it has happened before. Survival of the  fittest!!!

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1 minute ago, ceo_energemsier said:

OK, so the price of oil drops down to 30$/bbl, its  not like it hasnt happened before, and not that  it wont happen again. Its like the 4 seasons for most people (maybe two for some),

It maybe a blessing in disguise, clean up the industry mess, get rid of whiny folks, and streamline the entire industry and perhaps many many economies of the world and many many many industries that are bloated and running amok.

It could hurt a lot of people but it has happened before. Survival of the  fittest!!! 

Where "fittest" is defined as "those who mind history and have foresight." 

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32000  1 gallon gasoline in terms of watt-hours
96000  watt-hours needed to make gallon of gasoline from CO2 and water
19200  watts needed * 5 hours per day
3840  dollars needed at 20 cents per watt
1.501906718  dollars per gallon (3840 / 2556 days)
63.08008214  dollars per barrel (1.5 x 42 gallons per barrel)

In short, the gasoline price per barrel where solar becomes the cheaper alternative is $63, not accounting for various capital costs.

This ceiling is slipping lower by the day.

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10 hours ago, BakoDave said:

Add $1.00 for us in CA.

thats because yall have to have extra money to pay health insurance for illegal immigrants 😂😂

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18 minutes ago, cbrasher1 said:

thats because yall have to have extra money to pay health insurance for illegal immigrants 😂😂

They may increase that to 2.25$/gal

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Can someone help me understand something real quick. 

How is the extension of these cuts worth anything more than market buzz? Cuts have been in place since 2016, and have only deepened with Iran and Venezuela. Oil still closed in the 50s today. I'm failing to see at this point the significant impact of any of these cuts. Oil is continuing a downward trajectory with build after build. 

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7 hours ago, J.mo said:

Can someone help me understand something real quick. 

How is the extension of these cuts worth anything more than market buzz? Cuts have been in place since 2016, and have only deepened with Iran and Venezuela. Oil still closed in the 50s today. I'm failing to see at this point the significant impact of any of these cuts. Oil is continuing a downward trajectory with build after build. 

It's obvious their market clout is gone, but traders may still believe they have clout.  Perhaps they're milking that reputation before traders realize they're impotent? 

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9 hours ago, J.mo said:

Can someone help me understand something real quick. 

How is the extension of these cuts worth anything more than market buzz? Cuts have been in place since 2016, and have only deepened with Iran and Venezuela. Oil still closed in the 50s today. I'm failing to see at this point the significant impact of any of these cuts. Oil is continuing a downward trajectory with build after build. 

The build after build is in the US - since weekly data is published. OECD EU/APac data is also published on monthly basis by IEA (although undergoes substantial revisions before stabilizing). The problem is OECD consumption is more or less flat (well 0.2-0.3% growth). What you need is inventory data for China/India/now SouthEast Asia (since Trump started his trade wars) - that is not available.

And this creates a lot of problems. See below - nobody had any idea for how long China has been preping for the trade war. They are sitting on 25-50% (various sources) more inventory than normal and refuse to buy US crude till Trump continues with his tirade.

https://orbitalinsight.com/crude-markets-remain-adequately-supplied/

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2 hours ago, BenFranklin'sSpectacles said:

It's obvious their market clout is gone, but traders may still believe they have clout.  Perhaps they're milking that reputation before traders realize they're impotent? 

Keeping thinking that for a few more months and you will be surprised. Just like the traders you mention.

To think Saudi+Russia with 20%+ share of oil market do not have clout is a mistake, IMHO.

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13 hours ago, cbrasher1 said:

thats because yall have to have extra money to pay health insurance for illegal immigrants 😂😂

And don't forget, in some places they are allowed to vote too, so you will have a stupid hard time trying to get rid of those free benefits now. Even though they are not citizens, or even here legally they get to help determine what they get for free. Hmmmm, kinda dumb if you ask me.....

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2 hours ago, AcK said:

Keeping thinking that for a few more months and you will be surprised. Just like the traders you mention.

To think Saudi+Russia with 20%+ share of oil market do not have clout is a mistake, IMHO.

However what they do with that market share is the question. Cut their volume to prop up prices? How far do they cut? I've said this before in other threads. I'm in the retail fueling business and we have dealt with this scenario for ages. It can only be effective for so long. As they cut down their volume further and further, yes prices should go up. But they also stuff money in competitors pockets along the way, mostly at their own expense. Theres an axis point in there, where they will no longer continue. 

 

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3 hours ago, AcK said:

Keeping thinking that for a few more months and you will be surprised. Just like the traders you mention.

To think Saudi+Russia with 20%+ share of oil market do not have clout is a mistake, IMHO. 

Short term clout, maybe.  The problem is that any rise in prices will reduce their long-term market share.  If we define "clout" to mean "ability to increase the sum total of future profits", then no, I don't think they have clout. 

We can lump Russia in with Saudi Arabia, but are we convinced that relationship will last?  How much tolerance will Russia have for lost market share? 

Admittedly, I don't know how traders operate.  My naive guess is that massive price spikes occurred because people believed there was no replacement for Middle Eastern oil.  There's some psychological inertia in that human beings will expect supply restrictions to have the same effect in the future as they did in the past.  However, traders should slowly realize that the Middle East is replaceable.  This will become blatantly obvious in the next 5 years.  Once that happens, there will be no reason to fear OPEC restrictions.  It will become routine for OPEC to attempt price manipulation, and the market to quickly replace that production.  At that point, how high could oil possibly spike?

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