Today we only have time for a short flash-blog
Phew! OPEC has delivered. For now at least. What looks like a deal with a reasonable chance of working was announced in Vienna – and prices rocketed up in response (watch ASX listed E&P company share prices follow today). Brent was up nearly 11% at US$51.47 and WTI was up more than 8% at US$49.10.
The deal included the following elements:
- Total cut of 1.2 mmbbls
- The KSA to do the hard work (naturally) – and cut 0.5 mmbbls
- Iran allowed to freeze when it got to its pre-sanctions level
- Iraq to cut 0.2 mmbbls
- Most of the rest of the cuts shared by the Gulf States
- Venezuela agreeing to a small cut – in reality it probably faces large declines due to the complete mess the country is in
- Non-OPEC has been asked to cut by 0.6 mmbbls – supposedly as a condition for the OPEC deal (its biggest weak point?)
- Russia will do half of this – but is already claiming that “technical” reasons (“we like money!”) mean any cuts by it will be gradual
- Who the other non-OPEC parties might be is hard to work out. Certainly not the US – watch the rig count jump in the next few weeks
- Indonesia – who re-joined OPEC last year – has had its membership suspended – as it is a large net importer and not surprisingly therefore wanted prices to stay low. Who knew!
The EIA’s weekly inventory report was completely over-shadowed. It had a small crude cut of 0.9 mmbbls – and a large product build of 2.1 mmbbls of gasoline and 5 mmbbls of distillate.
Quote of the day
From another British TV comedy – Only Fools and Horses:
Delboy – “This time next year we’ll be millionaires Rodney!”