Update on the oversupply of oil
More completely wild guesses after comments yesterday on Saudi plans.
On one hand…
11/24 – Reuters at Bakken.com – Saudi Arabia says ready to work with others to stabilize oil market – Article says the Saudi cabinet is making comments indicating their willing to work with OPEC and non-OPEC oil producers to stabilize prices.
Next meeting of OPEC is on December 4.
On the other hand…
11/25 – Reuters at Bakken.com – OPEC to stay the course despite fears of $20 oil – article suggests cooperation with non-OPEC producers is not likely. Expectation from various oil ministers seems to be that production will not be cut, supply will not stabilize, and prices will not be going up. Oil minister for Venezuela is fearful prices could drop to the mid-if OPEC overproduction continues $20s next year.
Article points out the Saudi budget is under increasing pressure. One analyst speculates the government will have to either devalue its currency or cut production.
Article says there is increasing division in OPEC. Several unnamed sources expect there will be no agreement to reduce production at the December meeting.
In a clever move of the goal posts, the article says the Saudi goal was to boost world-wide demand for oil and stop the increasing of supply from shale. Commonly accepted understanding of the goal a year ago was their goal was to take out the US shale industry. That production increased until this summer and has barely dropped since means a restated goal is useful.