"Nobody Knows Anything" – The Battle Of The Oil Analysts
By Tyler Durden
Authored by Pepe Escobar, Op-Ed via RT.com,
The famous Hollywood adage – 'nobody knows anything' – seems to perfectly apply to the current turbulence in the oil market. So in an effort to clarify where the global oil economy is heading to, let’s engage in a Battle of the Oil Analysts.
Relying on these Oil Analysts (OA) does not necessarily mean you will be handed straightforward answers, but perhaps with some luck you will see a ray of light.
Saudi Arabia is saying that they are raising oil production to 12 million barrels a day. That’s highly debatable. Russia is saying that they can raise oil production to 13 million barrels a day. OA1 cuts to the chase: “Both are bluffing. Prices are still rising. That means no one believes them.”
OA2 kicks in, reminding that, “oil price is holding because of the 1.5 million barrels a day pulled off the market by a strike in Kuwait of about 10,000 workers. That cut their 3 million barrels a day production in half. Now they are going back to work. Yet the price of oil is still rising.”
I had explained before how the oil price was holding over $40.00 a barrel even with concerted Washington pressure over Saudi Arabia to keep it down. Then, OA3 had told me: “that’s because oil demand and supply is tightening.”
But then OA4 came up with a totally different outlook; the whole thing was about 'The Big Long', upon which I based my prediction of $45/$50 per barrel when I was in Tehran in November 2011 and the price was approaching $100 a barrel. The Saudis have been supporting the price and while they have plenty of capital to do so at high prices, storage is finite. Aligning with this, OA4 added that: “the market is about to crash, and is only being supported by the financial positions of the Saudi/GCC support operation, now unwinding.”
OA5, predictably, could not agree that the Saudis are supporting the market and about to let it collapse. He elaborated on how “hard it is to predict day-to-day prices. The only way you can know what is happening is to watch by satellite or surface observation the tankers coming out of each exporter, assume they are full, check their names to look up their capacity, and then add up what is leaving each exporter. What they say otherwise means nothing. There are services that do this that cost about $300,000 a year.”
OA6 kicked in with some perspective, explaining what happened in the middle of 2014: “The oil price started to crash with no visible increase in production. The deduction had to be that the surplus in the Gulf – which was the only place where there was a surplus – was being dumped in the market by the Gulf States, under orders from Washington. And this fit geopolitically with the uprising in Kiev as a replay of Afghanistan.”
If there is a consensus amongst most OAs, it is that Saudi Arabia is hurting. OA7 …read more
Source: "Nobody Knows Anything" – The Battle Of The Oil Analysts
