Oil and Gas Market Summary 9/23/16 from OilPricesDaily.com

Oil Prices Daily 9/23/16 from OilPricesDaily.com

Oil prices daily podcast discusses all of the news, events, and trends influencing oil prices each day.

Be sure to visit today’s oil prices daily newsletter for links to all news stories and sources mentioned in this podcast.

Links:

Saudis offer oil cut for OPEC deal if Iran freezes output: sources Reuters

Oil tumbles on more OPEC skepticism WSJ

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Transcript:

Hello everyone and welcome to the Oil Prices Daily Podcast. Doug Stetzer here bringing you your daily recap, all the latest news, events, and trends influencing oil prices.

Oil Prices Today is brought to you by EKT Interactive’s Oil 101, a free online introduction to the oil and gas industry covering upstream, midstream, and downstream fundamentals and everything in between.

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All right, let’s take a look at what happened in oil prices for today, September 23rd, 2016. It is Friday and we are going out with a bang as oil prices sank 4% or $1.84.

The November contract settled at 4448. What exactly happened? Deja vu. The meeting in Algeria is approaching and that will be the focus of everything next week. Of course, it’s been the focus leading up to the meeting.

Today comments out of Saudi Arabia, really the culprit in sending things lower as they just really voice low expectations for a deal to come out of this Algeria summit. Again, they’re just playing down chances of anything really happening here and talk the market lower.

In fact, there’s one analyst on Twitter who’s saying, “Saudi Arabia doesn’t expect agreement at Algeria’s meeting.” One of the reasons for this is that Saudi Arabia is challenging Iran to freeze their production at current levels, which are around 3.6 million barrels per day.

Iran has the goal of getting up to 4 million barrels per day has stalled out at current levels but still holding out that they can achieve these levels.

The last OPEC meeting this exact argument was what shelled any agreement there. The Saudis wanted other producers to freeze their current levels.

These other producers such as Iran, Iraq, and Libya want to have the ability to regroup and achieve and freeze at levels prior to all the various problems that have constrained their production. Saudi Arabia doesn’t want to make room for them.

Now Saudi Arabia’s saying we will reduce output if you freeze your current levels but we’ll just have to see if that’s acceptable argument or acceptable bargain for these countries.

What we are seeing is that Iran has taken a bit of a softer tone on this argument perhaps because they’re really having problems boosting their production beyond where it is right now.

Maybe they see this as a bargaining chip where they can agree to a freeze at current levels knowing that within the next year it’s basically difficult for them to achieve higher production rates anyway.

In return for Saudi Arabia pulling back a little bit and perhaps offering a boost to oil crisis in the long run.

However, I saw a really interesting tidbit in a Reuters story that’s in the newsletter that says, “Saudi Arabia output usually drops in winter and spikes during hot summer months.

Hence Iran could dismissed the proposed reduction as an attempt by Riyadh to present a natural decline as a cut.” Really interesting, just a lot at play here. Really again just showing how all of this chatter leading up to the meeting is just that.

It’s a lot of talk, there’s a lot of politicking going on and it’s really hard to see how all of these different players are going to get on board. No matter what the Venezuelans say, no matter what the Nigerians say.

Anyway, price is down 4%.

If you look at the daily chart in the newsletter, it’s basically gave up the equivalent of the last two days gains. Technically again, as we’ve said, no real breakout on that upside move.

With this move, we’re not pressuring big technical levels or anything like that. We’re really just in the middle of the range. Hard to take a position right here, if you’re not in something already, on any kind of direction. You’re just not really getting any direction out of any of this.

If you look at the entry date chart on the newsletter you’ll see that once these comments came out the market had actually been trading up towards the highs, right around where we closed yesterday and just fell off a cliff and stayed there for the rest of the afternoon.

As far as any other news stories, of course this is really the dominant news story today.

There was not a whole lot else but really what else could there be at this point? In the newsletter we found a couple of other topics to talk about if you feel like checking them out. There was a couple of interesting articles on the same topic about what Saudi Arabia’s going through from a budgetary and economic standpoint due to falling oil prices.

I thought it was pretty interesting. They’re definitely the strongest player in OPEC. They’re the elephant in the room and are doing a lot of posturing with the other players.

At the end of the day this battle for market share and these little oil prices have taken a toll, both on their local economy, on their foreign currency reserves as they prop everything up, and on how their middle class is living with some of these cut backs from the government that they’ve become used to.

Pretty interesting day.

Again, hard to place wagers when the market is so susceptible to these types of moves. I think that’s going to be about it for the week.

Next week’s going to be volatile as analysts sit there and just take apart every tidbit of information coming out of OPEC.

There’s also going to be a lot of posturing and a lot of playing of the media people putting out new stories that may or may not be true. A lot of people just … It’s going to be interesting.

We’re just going to have to wait and see.

All right, have a great weekend.

That’s it for Oil Prices Daily for the week. Remember let us do the heavy lifting for you. Get our concise recap of all the latest news and events that are influencing oil prices each day by signing up for the newsletter at OilPricesDaily.com.

Of course you can also subscribe to this podcast on iTunes. Thank you very much, have a great weekend.

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