Oil prices plunge after Opec meeting

[webfact]

Oil prices plunge after Opec meeting

(BBC) The price of oil slumped after the Opec oil producers' cartel decided not to cut output at its meeting in Vienna.

Opec's secretary general Abdallah Salem el-Badri said they would not try to shore up prices by reducing production.

"There's a price decline. That does not mean that we should really rush and do something," he said.

Following the announcement Brent crude hit its lowest since August 2010, falling below $72 a barrel, before settling at $72.58.

The US benchmark dropped $4.64 to $69.05 a barrel, although market business slowed by midday in thinning Thanksgiving holiday business.

The 12 Opec members decided to maintain production at 30 million barrels per day as first agreed in December 2011.

Full story: http://www.bbc.com/news/business-30223721


-- BBC 2014-11-28

[NeverSure]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

[Robert24]

it's not killing Russia. it's killing smaller shale oil producers in the US who need an oil price at 70-75$ to break even.These are the ones that will stop at such low prices. Russia's producers and also the ones in the Middle East have much lower break even points than current price levels.

[CWMcMurray]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

And yet the price at the pumps remain the same....

[konying]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

How does it not damage Saudi?

Oil is not the only source of income for Russia, Gas is just as much.

Its deliberate alright, only more like cutting its own oxygen.

[BritManToo]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

And yet the price at the pumps remain the same....

In Thailand prices of 91 and E20 have dropped 10% in the last week.

[konying]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

And yet the price at the pumps remain the same....

In Thailand prices of 91 and E20 have dropped 10% in the last week.

106 down to 70 is little more than 10%

[BritManToo]

And yet the price at the pumps remain the same....

In Thailand prices of 91 and E20 have dropped 10% in the last week.

106 down to 70 is little more than 10%

Raw materials contribute a fraction of the retail cost of any product.

[konying]

And yet the price at the pumps remain the same....

In Thailand prices of 91 and E20 have dropped 10% in the last week.

106 down to 70 is little more than 10%

Raw materials contribute a fraction of the retail cost of any product.

Not the song oil company's have been singing for years when prices tripled, claiming the reason for high pump prices is the cost of oil per barrel.

[jcisco]

And yet the price at the pumps remain the same....

In Thailand prices of 91 and E20 have dropped 10% in the last week.

106 down to 70 is little more than 10%

Raw materials contribute a fraction of the retail cost of any product.

Of course they contribute a fraction to the retail cost, or are you trying to say something else. Or more to the point 10% drop in pump price per litre in the face of a 40%+ drop in price for 159L of crude (a barrel) is absurd at first glance. I would suspect that curves on the production economies not to be linear in some areas, but besides all that, oil companies make a packet and have a captive audience at the end consumer, of course the are going to gouge out as much as they can.

[BritManToo]

Raw materials contribute a fraction of the retail cost of any product.

Not the song oil company's have been singing for years when prices tripled, claiming the reason for high pump prices is the cost of oil per barrel.

I think you will find most of the price rises is government tax.

[Living in a cartoon]

And yet the price at the pumps remain the same....

In Thailand prices of 91 and E20 have dropped 10% in the last week.

106 down to 70 is little more than 10%

Raw materials contribute a fraction of the retail cost of any product.

Feedstock is always a fraction of the retail cost. Guess I don't get the point, no one expects retail prices to fall as much.

If the EU gets too cold this winter, they can always put on an extra sweater. If the Russians get too hungry, they can always live off the body fat.

Putin looks like a scared little schoolboy.

[wump]

You need to have a look at the tax structure for that. The slow fall on the other hand also prevents a doubling of gas prices when the oil price doubles.

Refining, transport and retail is a tiny fraction of the price at the pump. Most of it is made up of oil price +/- tax/subsidy.

[CWMcMurray]

And yet the price at the pumps remain the same....

In Thailand prices of 91 and E20 have dropped 10% in the last week.

106 down to 70 is little more than 10%

Raw materials contribute a fraction of the retail cost of any product.

If that's the case, then why do gas prices rise when the cost of oil increase?

[daveAustin]

Price at the pump should already be 20 baht if oil prices are anything to go by. I just don't buy it when they tell us it's the cost of refining, transport etc. When oil was last at this price I don't remember it being this price at the pump. Takes time to clear old stocks, sure, but price has been down for ages. We're all being bent over for taxes and everyone knows it. Screw the oil companies, the world will be better off when it's all gone!

[BritManToo]

You need to have a look at the tax structure for that. The slow fall on the other hand also prevents a doubling of gas prices when the oil price doubles.

Refining, transport and retail is a tiny fraction of the price at the pump. Most of it is made up of oil price +/- tax/subsidy.

1 barrel crude = 160l

Transformation is very efficient, and often exceeds 160l (assorted end products) of output.

So raw material cost of petrol is currently $0.43/liter

And in Thailand pump price is $1/liter

[steelepulse]

This page shows historic prices of petrol for the year. http://www.pttplc.com/EN/Media-Center/Oil-Price/pages/Bangkok-Oil-Price.aspx

August 29th was when prices had a decent haircut.

[Living in a cartoon]

Pump price was almost $4/gallon in the US when I came back here to Thailand last summer, now it's below $3. I don't drive all that much even in the US, but a lot of people do.

I'd hate to be Putin's sphincter, I can here it tightening from here.

[Robert24]

the reason the pump prices are not falling is because the government/PTT are using the profits to pay back the debt in the oil fund. The government already announced that they want to go back to a floating/market price for pump prices and cut all the subsidies incl LPG/CNG. They said with current profits they should be there very soon to have paid back the debt in this fund.

I think this is a great development. I never understood how this oil fund worked and the sooner it's cleared and we move to market prices the better. BTW this is similar to other countries who recently cut their subsidies, i.e. Indo, Malaysia etc.

[NeverSure]

it's not killing Russia. it's killing smaller shale oil producers in the US who need an oil price at 70-75$ to break even.These are the ones that will stop at such low prices. Russia's producers and also the ones in the Middle East have much lower break even points than current price levels.

Not so fast. Russia breaks even at about $70 so what does it have to feed its communist nation with?

Fracking or oil shale production is profitable at $70. Not as much as they'd like, but techniques are improving.

"It’s a tough test, and OPEC may not like the results. The break-even for American oil has been falling as fracking techniques are refined. The U.S. is producing unconventional oil with acceptable returns in the range of $70 a barrel for oil, less than most OPEC nations can sustain.

There’s little incentive for U.S. producers to slow down anytime soon. Even the drillers who do get squeezed will be loath to cut production. Investors tend to punish exploration and production companies that slow their pace."

LINK

When it comes to oil, the US is king. It is outproducing Saudi Arabia and Russia. There is an oil war going on right now.

Cheers

[konying]

Pump price was almost $4/gallon in the US when I came back here to Thailand last summer, now it's below $3. I don't drive all that much even in the US, but a lot of people do.

I'd hate to be Putin's sphincter, I can here it tightening from here.

Little obsession there or wishful thinking?

[Living in a cartoon]

I'd never screw your man.

Putin wants to be Stalin, but he doesn't have the balls.

Scared little school boy.

[Jimbolai]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

it is not only sutainable but further drops are likely.

[NeverSure]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

How does it not damage Saudi?

Oil is not the only source of income for Russia, Gas is just as much.

Its deliberate alright, only more like cutting its own oxygen.

It's bad for the dollar too.

It will take many years to 'kill' Russia.

I don't think the corrupt Gulf monarchies have the resolve to see it through

Another hare-brained scheme courtesy of the Obama mal-administration.

So why has the Russian Ruble fallen by about 50% against the USD this year? Why does the USD keep rising against a basket of currencies?

[Asiantravel]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

How does it not damage Saudi?

Oil is not the only source of income for Russia, Gas is just as much.

Its deliberate alright, only more like cutting its own oxygen.

It's bad for the dollar too.

It will take many years to 'kill' Russia.

I don't think the corrupt Gulf monarchies have the resolve to see it through

Another hare-brained scheme courtesy of the Obama mal-administration.

today's FT, why China's Renminbi offshore market has gone from nothing to billions in a short space of time.

http://www.ft.com/intl/cms/s/51e2a5d2-59f0-11e4-8771-00144feab7de,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F51e2a5d2-59f0-11e4-8771-00144feab7de.html%3Fsiteedition%3Dintl&siteedition=intl&_i_referer=http%3A%2F%2Fwww.zerohedge.com%2Fnews%2F2014-11-27%2Fthere-will-be-blood-petrodollar-death-means-liquidity-and-oil-exporting-crisis-deck#axzz3HwKVRo27

and Reuters

Petrodollars leave world markets for first time in 18 years - BNP

http://www.reuters.com/article/2014/11/03/emerging-oil-petrodollars-idUSL6N0ST2YZ20141103?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews

Edited November 28, 2014 by Asiantravel

[Living in a cartoon]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

It's not just "getting even", though that would be enough for me. It's strategic.

If I could speak their language, I'd tell all these Russian tourists to get rid of their cheap trinkets and fill their baggage allowance with food for the return trip. And plant a garden next spring.

Pukin' is a scared little boy.

[HUAHIN62]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

Be careful this maybe aimed at sinking the US fracking industry. If you read outside of the msm you will know that in most fracking oil plays the production of the wells are falling much faster than projected. This means that the frackers must frack more and drill more wells which is capital intensive. When the oil price falls below $ 70 they will not be able to generate enough cash to maintain the capex and their production will slowly fade away, together with the American oil independence dream.

Here is an article about the effects of the low oil price.

http://www.zerohedge.com/news/2014-11-27/there-will-be-blood-petrodollar-death-means-liquidity-and-oil-exporting-crisis-deck

.

Edited November 28, 2014 by HUAHIN62

[Robert24]

This is killing Russia and it's deliberate. The US and Saudi are pumping all-out to drive the price down.

The world oil price is 1/2 what it was in 2009, and as recently as five months ago it was $106. Now it's $70.

Putin depends on oil to run his economy but neither the US or Saudi will be damaged by this.

This is "get even" for Syria and Ukraine without firing a shot.

The big mouth in Russia who thought oil riches would allow him to put the USSR back together by force if necessary has been cut off at the knees.

How does it not damage Saudi?

Oil is not the only source of income for Russia, Gas is just as much.

Its deliberate alright, only more like cutting its own oxygen.

It's bad for the dollar too.

It will take many years to 'kill' Russia.

I don't think the corrupt Gulf monarchies have the resolve to see it through

Another hare-brained scheme courtesy of the Obama mal-administration.

So why has the Russian Ruble fallen by about 50% against the USD this year? Why does the USD keep rising against a basket of currencies?

The Rubel has fallen because of the economic sanctions against Russia on the back of the Ukraine crisis. The USD is strong and will get stronger on the back of less expansionary monetary policies by the FED, i.e. finishing QE and expectations that the FED will start increasing interest rates next year.

Both moves have little to do with the recent oil price weakness. Weak oil prices have 2 effects on the US economy: 1) consumers will have more money to spend because oil is cheaper and 2) the shale oil boom will slow or entirely stop depending on how much the oil price will further drop.

With regards to the Russian economy, the falling oil price will hurt them because oil revenues are a significant part of their economy. But bear in mind that they export significant amount of gas as well, so you need to look at energy prices overall, not just oil.

[Canucklehead]

Any one else realize this is the time to buy some crude stocks........... we all know its going back up...

[elgordo38]

it's not killing Russia. it's killing smaller shale oil producers in the US who need an oil price at 70-75$ to break even.These are the ones that will stop at such low prices. Russia's producers and also the ones in the Middle East have much lower break even points than current price levels.

At $70 a barrel 40% of the shale producers are loosing money. Do they continue to loose money for the sake of the Motherland? Some will continue to hemorage money as they have land lease payments and equipment rental costs. If they do not keep their experienced workers they will be in trouble when the oil tide turns which it must when operations are shut down. The Saudi's will not cut production they learned last time it does not work as their own OPEC members stabbed them in the back and increased production.