Saudi Arabia said they will do whatever it takes to balance the oil market, again. Yet this time the market, unlike the last time, believes them as OPEC and their compliance has earned some market cred. Oil prices which were floundering lower overnight reversed course and surged higher after Saudi Energy Minster Khalid A. Al-Fali spoke and said that he was “determined to do whatever it takes to balance the market.” He also said that oil producer will have more to do which is signaling that it is very likely that OPEC and Non-OPEC will extend current production cuts, as he says that they are “very flexible and will keep their options open”, even though it seems based on data that we are already in a daily supply versus demand deficit.
Khalid A. Al-Fali also noted the shale oil slowdown pointing out that shale oil production has risen only slightly. This is a strong statement as many feared was that shale oil production would offset OPEC and Non-Opec cuts, But the reality of shale economics and falling production per well has proven that at least right now, the shale oil producers were not up to the task.
The Saudi Energy Minster also said that compliance to the deal eased better than he expected and that global inventories are declining. In other words, OPEC is on the verge of accomplishing their goal of ridding the world of the oil supply glut and will create an environment for higher prices soon. This comes as the American Petroleum Institute should report another big drop in U.S. crude, gas and distillate supply. The possibility of an upside breakout is rising. Call for latest trades.
My buddies at GasBuddy say retail gas prices are going down in most places but not near me in Illinois. GasBuddy puts the “national average gas price is lower for the sixth straight week, the longest such decline since the summer of 2016,” said Patrick DeHaan, head of petroleum analysis for GasBuddy. “Perhaps even more wild is that the national average has now remained under $3 per gallon for nearly 3 years, or 1,087 days as the days of cheap oil have continued.
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