OPEC Runs Out of Options as Bid to Boost Oil Price Fizzles

[IsailedawayfromFR]

OPEC’s plan to boost oil prices by cutting production has fizzled, yet it has little choice but to stick with it.

Crude has surrendered all of its gains since the Organization of Petroleum Exporting Countries first agreed production cuts in November. While the group has implemented the curbs, a rebound in U.S. shale output and stubbornly-high stockpiles show the world’s three-year crude glut isn’t shifting. Even signals from Saudi Arabia and Russia that they’ll prolong the supply reductions haven’t staunched the rout.

Yet OPEC has limited room for maneuver when it meets on May 25 in Vienna to discuss the deal, and is almost certain to persevere because the alternatives look even worse. If it were to deepen the cutbacks, even more shale supplies might come along to fill the gap, according to UBS Group AG. Abandoning the policy and restoring output would inflict the economic pain of crude below $40, Citigroup Inc. predicts.

“The risk of a higher cut is that it could trigger too strong an increase in prices and support U.S. shale,” said Giovanni Staunovo, an analyst at UBS in Zurich. “If they change strategy, Saudi Arabia would lose face. You can’t say you want lower inventories, and after a few months give up.”

https://www.bloomberg.com/politics/articles/2017-05-05/opec-runs-out-of-options-as-bid-to-make-oil-great-again-fizzles

US and the.western world has entered an enviable time of low crude prices.  This severely reduces the capacity of Russia to do us harm as well as OPEC to confiscate our wealth.  It does not bode well for either of them in the shorter term.  Our foreign policy needs to reflect this.

The only way we can screw this up is to add onerous energy taxes.

[Idiot]

I long for the days of $100 oil. 

[Smokin Joe]

I long for the days of $100 oil. 

I was doing quite well then. Now, not so much.

[Wingnut]

US and the.western world has entered an enviable time of low crude prices.  This severely reduces the capacity of

The only way we can screw this up is to add onerous energy taxes.

Or elect a bunch of rats at the mid terms and screw up things.

[Idiot]

I was doing quite well then. Now, not so much.

I feel your pain.  I thank the Good Lord that I had some pretty decent oil production during the last few horrible years.  It's quite dramatic to see your income fall by 75% then mercifully it's come back up some as oil has risen close to $50.  It's been a rough couple of years for sure.

A company here that works on geolographs has a sticker that they pass out to rig hands, etc.  It shows a dog who is skin and bones....and caption says "It's been another great year in the oil field." 

We are supposed to drill a couple shallow wells in the next couple of weeks.  Nothing more fun than chasing the shallow pays.

I pray things pick up for you.

@Smokin Joe

[Smokin Joe]

I feel your pain.  I thank the Good Lord that I had some pretty decent oil production during the last few horrible years.  It's quite dramatic to see your income fall by 75% then mercifully it's come back up some as oil has risen close to $50.  It's been a rough couple of years for sure.

A company here that works on geolographs has a sticker that they pass out to rig hands, etc.  It shows a dog who is skin and bones....and caption says "It's been another great year in the oil field." 

We are supposed to drill a couple shallow wells in the next couple of weeks.  Nothing more fun than chasing the shallow pays.

I pray things pick up for you.

@Smokin Joe

Thanks! They will, I just hope I'm still young enough to take advantage of it.
One of the most fun outfits I worked for had a starving coyote on their
We had a bumper sticker around here that said "Please, God, give us another oil boom. I promise not to piss it away this time." It will likely make a comeback...my only worry is that by the time it does, the Dems will be fighting us drilling our own.

[IsailedawayfromFR]

I long for the days of $100 oil. 

It may be awhile, but it will be back.

The concentration of efforts by the industry are in the unconventionals.

As seen at OTC last week, only a select few of the deepwater or other conventional targets are seriously being considered at $50 oil - companies just cannot afford to layout such large negative cashflow for years without the expectation of higher prices out there.  http://www.houstonchronicle.com/business/article/OTC-attendance-down-as-offshore-loses-its-groove-11122942.php

Even with the fantastic technological advances we have seen, the unconventionals when you get down to it are controlled by geologic horizons.  There are just not that many susceptible to producing liquids out of such tite formations profitably.

Prices will go up after the inventory runs thin, whether in 2 years or 10 years.  OPEC will then be back in business.

Glad I am retired already, as working under stringent conditions is no fun.

And the good news:
1. Countries other than the US are the ones really taking it on the chin (Glad we are not Venezuela)
2. And for the Younger folks - the oil ain't going anywhere either.

[Joe Wooten]

We had a bumper sticker around here that said "Please, God, give us another oil boom. I promise not to piss it away this time." It will likely make a comeback...my only worry is that by the time it does, the Dems will be fighting us drilling our own.

I saw that bumper sticker in West Texas back in 1984.......