OPEC PREVIEW : NO CUT IS GLUT
VIENNA, Nov 26 (Reuters) – OPEC Gulf oil producers will not propose an output cut on Thursday, reducing the likelihood of joint action by OPEC to prop up prices that have sunk by a third since June.
“The GCC reached a consensus,” Saudi Arabian Oil Minister Ali al-Naimi told reporters, referring to the Gulf Cooperation Council which includes Saudi Arabia, Kuwait, Qatar and the United Arab Emirates. “We are very confident that OPEC will have a unified position.”
I am not permissioned to reproduce what the expert had to say suffice that the gist of it is that there is a large chance for prices to continue to decrease !
We are sitting on 4 year lows now for both the Brent and WTI and the problem is not even in a cut in production because we are already sitting on considerable stockpiles and excess of production that is estimated at 1.3 million barrels per day.
If there is not cut in production, the stockpiles will just keep growing, putting a dampener on investments and all those new rigs and ships will be delivered to heavy hearts next year.
Meanwhile, this puts the bull in the hands of those oil dependent nations with swelling populations like India and Indonesia, buying them a longer period of time to turn their economies into the much needed new growth engines of the world.
I would remain bullish the major producers and bearish the O&G support services companies, especially the little ones.
Incidentally, the LNG and Natural Gas markets are holding up well which is surprising, considering the competition for example, propane and butane would face from oil derived naptha.
I am not sure if I should be cheering for higher or lower prices anyway.