Please consider Oil Falls in Longest Losing Streak on Record.
- Oil prices notched their longest losing streak on record Monday, as comments from President Trump negated expectations that the global oil cartel and its allies will cut production.
- Light, sweet crude for December delivery fell 0.4% to $59.93 a barrel on the New York Mercantile Exchange, marking the 11th consecutive session of losses, the longest in data going back to 1983.
- Brent crude, the global benchmark, also closed lower, down 0.1% to $70.12 a barrel.
- Saudi Arabia’s Mr. Falih on Sunday also said his country would unilaterally slash its exports next month by around 500,000 barrels a day, compared with November levels. However, Russia—currently the world’s largest oil producer—sent mixed messages on whether it would pull back on supply.
Trump Calls for Lower Oil Price
Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!
— Donald J. Trump (@realDonaldTrump) November 12, 2018
Sanctions Not Working Out as Expected
At the Abu Dhabi Summit, OPEC says Oil Production Cuts May Be Necessary.
OPEC and allied oil-producing countries will likely need to cut crude supplies, perhaps by as much as 1 million barrels of oil a day, to rebalance the market after U.S. sanctions on Iran failed to cut Tehran’s output, Saudi Arabia’s energy minister said Monday.
The comments from the minister, Khalid al-Falih, show the balancing act the U.S. allies face in dealing with President Donald Trump’s actions related to the oil industry.
Trump in recent weeks demanded the oil cartel increase production to drive down U.S. gasoline prices. “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” he tweeted Monday.
The U.S. has meanwhile allowed some of its allies — Greece, India, Italy, Japan, South Korea, Taiwan and Turkey — as well as rival China to continue to purchase Iranian oil despite re-imposed sanctions, as long as they work to reduce their imports to zero.
Al-Falih, who on Sunday said the kingdom would cut production by over 500,000 barrels per day in December, said Monday that Saudi Arabia had been giving customers “100 percent of what they asked for.” That appeared to be a veiled reference to Trump.
A gallon of regular gasoline in the U.S. on average now sells for $2.69, down from $2.90 a month ago, according to AAA. Those lower prices likely quieted Trump, but production cuts could again boost prices at the pump.
US Production Soars
Oil Price reports U.S. Oil Production Is Set To Soar Past 12 Million Bpd.
Rising shale production is putting the United States on track to hit the 12 million bpd oil production mark sooner than previously forecast, the Energy Information Administration (EIA) said in its November Short-Term Energy Outlook (STEO).
Next year’s U.S. crude oil output is now expected to average 12.1 million bpd, up from a forecast of 11.8 million bpd just a month ago in the October STEO.
U.S. crude oil production reached a new monthly record of 11.3 million bpd in August 2018, exceeding 11 million bpd for the first time. Production in August was 290,000 bpd higher than expected in the October STEO, and it was this higher level that raised the baseline for the EIA’s forecast for production in 2019.
Comparing the forecasts in the latest STEO with the October estimates, the EIA now sees U.S. crude oil production hitting the 12-million-bpd mark in the second quarter of 2019 rather than the fourth quarter.
“The lower crude oil price forecasts are partly the result of higher expected crude oil production in the United States in the second half of 2018 and in 2019, which is expected to contribute to growth in global oil inventory and put downward pressure on crude oil prices,” the EIA said.
Cheaper Oil is Easy
Want cheaper oil? it’s easy enough.
All Trump has to do is stop his foolish sanctions on Iran. They have had some impact, just not as much as Trump wants.
There’s another way: Recession fueled by idiotic tariffs, rate hikes, and bubble-blowing policies by central banks.
Mike “Mish” Shedlock
Well Well Well, Mish finally likes something that Pres.Trump’s Economic Plan has accomplished. Mish needs to stop consulting with Paul Krugman at the NYT.
The issue which this analysis ignores is the oil-exporting country with one of the largest oil reserves in the world — Venezuela.
After years of being run by the same kind of policies too many Leftists want to impose on the US, Venezuela is a basket case. We could reasonably imagine a military coup in Venezuela to restore sanity and boost oil exports substantially; or we could equally reasonably imagine that Venezuela’s Far Left Political Class will continue to run the country into the ground and oil exports will cease. Huge uncertainty!
USA should send elite troops to capture or kill the top 100 elite socialists running Venezuela to the ground through corruption and embezzlement and killing their own citizens through starvation and malnutrition and state sponsored violence and USA should install a care-taker government to return basic services and make it possible for companies and entrepreneurs to work without crazy socialist government confiscations and release all the thousands of political prisoners Venezuela has and then run democratic and internationally monitored elections in 2019 to return Venezuela to a working country.
Why not it worked great in Iraq, and Afghanistan
Oil and gold have been taking a beating. Shows confidence in the almighty fiat.
I don’t understand what Trump is doing with essentially voiding the sanctions against Iran. Maybe he’s actually a little smarter than I give him credit for.
Make that a “12”.
Must be due to the “booming global economy”.
LOL…
Not about demand anymoar,demand collapsed a decade ago even while production skyrocketed!Tankers can’t unload ,no place to put the stuff,yet prices (like stocks)quadrupled while demand is at multi decades lows……why?ugh ugh ugh central banks printing money like crazy and buyin oil(everything) hand over fist to drive price up….duh u think!
Cheap energy is good for the economy, or at least for some parts of it.
One issue for the Saudis is they need the “cash” , so they can’t cut production too much.
As for the US shale production…wait till the coming(severe) recession/stagflation puts a big damper on demand. 🙂
I’m confused: Seems like cheap energy should be good for the economy, but stocks seem to go down with the price of oil. What’s up with that?
There’s been decades since prices for casino chips and “the economy” had anything in common.
I think the logic is that cheap oil prices will kill American producers, since shale oil tends to be have higher production costs. That will reduce jobs, and will increase the trade imbalance.
Stock prices are based on psychology not economics. Look at charts for stock prices compared with oil, gold, etc and you will see at times they are positively and sometimes negatively correlated. Talking heads and economists like to try to explain price fluctuations on a causal relationship to news. Fear and greed drive prices.