OPEC/Non-OPEC cut at 1.2m bpd; Iran's smiling

In case you haven't heard dear readers, which the Oilholic doubts or you wouldn't be reading an oil market blog - OPEC has calmed the crude market with a 1.2 million barrels per day cut, in concert with 10 non-OPEC producers led by Russia.

Both Brent and WTI are up by over 4% at the time of writing, and Iran is smiling all the way to the bank having secured an "exemption" before US sanctions start biting more meaningfully. 

Will provide some more composed thoughts upon return to London from Vienna, as one has to scoot to the airport. That's all from Vienna folks! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2018.  

OPEC's Friday numbers game

So here we are back again at Helferstorferstrasse 17 on Friday (December 7), for another packed room at the "5th OPEC and non-OPEC Ministerial Meeting." That's after having received no formal announcement on the level of OPEC cuts overnight at the "conclusion" of the 175th OPEC Ministers Meeting, and Saudi Oil Minister Khalid Al-Falih having told CNN a deal on a production cut may not materialise. 

The morning after extreme volatility in the oil markets, OPEC's numbers game continues. The latest that multiple sources seem to suggest is that OPEC is inclined to cut 650,000 barrels per day (bpd), and non-OPEC countries another 350,000 barrels per day, all tallying up to a possible 1 million bpd cut proposed overnight. 

Question is - will the market be convinced, especially if Iran and a few smaller members decline to participate? The Oilholic doesn't think so (and Iran continues to play hardball and the formal OPEC /non-OPEC meeting has not even begun yet @12:46 GMT). 

To support a $70 oil price, a 1 million bpd cut won't do, but may serve to de-risk a huge decline. Anything above that appears unlikely. We wait and see! More from Vienna soon. Keep reading, keep it 'crude'!

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© Gaurav Sharma 2018. Photo: OPEC Media Briefing room, Vienna, Austria, December 2018 © Gaurav Sharma 2018

No Show: OPEC press conference cancelled

In a rather unprecedented development of sorts, the 175th OPEC Summit's concluding press conference was cancelled, as member nations could not agree to er...a..concluding statement. 

Sources say Iran, and other members exempt from oil production cuts, were asked to participate in a proposed cut and declined to do so. 

Hence, the can got kicked down the road, and proceedings will resume on Friday (December 7). There is expected to be some sort of announcement after discussions with the Russians and 9 other non-OPEC producers. Things do remain on track for a 1 million barrels per day (bpd) cut, but its doubtful that would push the bears that far. 

The event is unprecedented in recent times, and only once in the past has OPEC failed to hold a concluding press conference. We've had one even at times of acrimony and differing positions between its members over the years. 

As for the market, WTI is down 4.86% to $50.32 per barrel, while Brent is at $58.88, down 4.35% following the development. Bit of a farce this is, but that's all from OPEC this evening. Keep reading, keep it 'crude'!

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© Gaurav Sharma 2018. Photo: Empty podium at the 175th OPEC Meeting Press Conference, Vienna, Austria © Gaurav Sharma 2018.

OPEC's 'Crude' Basket & Last Friday's close

Two charts real quick while waiting for OPEC to make an announcement - (1) Direction of the OPEC price basket (including Qatar) and (2) Where the oil benchmarks ended last week (Friday, 30 November)! Let's see what the movement is like by the time this week is done! (Click to enlarge both charts)!

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© Gaurav Sharma 2018. Graph 1: OPEC Crude Oil Price Basket (YTD December 2018), Graph 2: Friday benchmark closes to November 30, 2018 © Gaurav Sharma 2018.

First quips & intraday soundbites from OPEC 175

It's the usual manic start to the 175th OPEC Ministers' Meeting here in Vienna, Austria. For those unfamiliar with the drill, here we go - a long queue of analysts and journalists, the Oilholic included, waiting to get in, followed a long queue to go up to see the ministers in the summit's conference room, followed by a mad dash to see them, followed by a media gang b..., I, er media scrum, and the security chucking everyone out! True to form manic wires and tweets follow, and Thursday (6 December) was no different.

Here are some highlights from the Oilholic's attendance and questioning of ministers in two media scrums - that of Saudi Oil Minister Khalid Al-Falih and UAE Oil Minister and current OPEC President Suhail Al Mazrouei - embedded below via his twitter account:

Saudi #Oil Minister @Khalid_AlFalih insists no formal dialogue with US over #oil production levels, says there is appetite to 'reduce' production, dialogue not just about what #Russia & Saudi Arabia want #OOTT #oilandgas #OPEC pic.twitter.com/1yUgk8MKQO

— Gaurav Sharma (@The_Oilholic) December 6, 2018

#UAE will not use its spare crude production capacity to distort the #oil market, says @HESuhail #OOTT #oilandgas #OPEC pic.twitter.com/C5aVrK1oXU

— Gaurav Sharma (@The_Oilholic) December 6, 2018

And here is a link to Al Mazrouei's opening statement to the conference.

Putting it altogether, some summary points:

1) The Saudis are still denying any discussions were held with the Americans with regard to oil production levels. 

2) Data suggests Riyadh is pumping in excess of 11 million barrels per day (bpd).

3) An OPEC cut of 1 million bpd is likely (which would be below market expectations). 

4) All rather mum and diplomatic about Qatar's decision to quit OPEC. 

5) Saudi Arabia wants "all" participants to contribute to cut, Iran is against it, while Libya and Nigeria are exempt from it (as things stand). 

More from Vienna soon! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2018. Photo: Start of the 175th OPEC Ministers' Meeting in Vienna, Austria on December 6, 2018 © Gaurav Sharma 2018.