It’s likely that the current “disagreement” about how fast Russian oil production is falling will be resolved in favor of “pretty fast” despite spin from Moscow. Which would mean that Friday’s jump in oil prices–West Texas Intermediate crude gained 2.165 to $110.60 a barrel–will continue. And so will Friday’s rally in oil stocks. ConocoPhilips (COP), for example, was up 4.69% on Friday. Pioneer Natural Resources (PXD) gained 5.35%.
Yesterday, Russia sent oil prices tumbling by saying that it might be time for OPEC and its allies (including Russia) to revisit current production cuts. Today, it’s Saudi Arabia. “I think in the near future there will be time to release supply,” said Saudi Energy Minister Khalid Al-Falih. U.S. benchmark West Texas Intermediate fell to close down 4.41% today at $67.59. The international Brent benchmark dropped 3.2% to $76.27
The energy ministers from Russia and Saudi Arabia will discuss a potential relaxation of the global output cap agreed between OPEC and Moscow when they meet on June 22. That was enough today to end the rally in oil. West Texas Intermediate fell to $70.71, down 1.59%and Brent crude dropped to $78.79, a decline of 1.3%.
Unless you’re invested in South Korean equities, President Donald Trump’s decision to cancel the June 12 summit with North Korea is a non-event in today’s financial markets. The iShares MSCI South Korea Capped ETF (EWY) was indeed down 1.60% as of 3 p.m. New York time, but the wider iShares MSCI Emerging Markets ETF (EEM) is off just 0.61% and U.S. indexes are lower by even small amounts with the Standard & Poor’s 500 down 0.18%
Today, just two days after the collapse of 16-nation talks to cap oil production Russia and Saudi Arabia are talking about boosting production to prevent the loss of market share to Iran. Just talk? Or the beginning shots in an oil producers war that could sweep up Iran, Russia, Saudi Arabia and other Gulf producers before its over?
Is this the death knell for the proposal to cap oil production at historical highs? On Friday, Saudi Arabia said that it would boost its own output if any other country, such as Iran, increased its production. The weekend brought data showing that Russia’s oil output in March rose to a new record high of 10.912 million barrels a day., according to the Energy Ministry
On September 23, the Saudi Oil Minister said a freeze on oil production between Saudi Arabia and Russia is not going to lead to actual cuts because there is “less than trust” that other countries will deliver
