Oil prices little changed on mixed Saudi messages before US stock data
- Author: Zachary Reyes Mar 09, 2017,
Mar 09, 2017, 18:03
Saudi Arabia's energy minister warned non-OPEC producers that the kingdom is not going to offer free rides to competitors, but struck a conciliatory message towards the US political establishment Tuesday.
Saudi Arabia will no longer "bear the burden of free riders" in the global oil market, Saudi Minister of Energy, Industry and Mineral Resources, Khalid Al-Falih, said Tuesday. Traders should also start to expect renewed talks of an extension of the program if crude breaks below $50.00. Last year, OPEC and 13 other countries outside the cartel made a decision to restrict production, having triggered a rise in oil prices up to 55 dollars per barrel, Die Welt wrote.
At CERAWeek by IHS Markit on March 7, OPEC Secretary General Mohammad Barkindo chose to clear the air: "For the record, we didn't have any war".
"I think that has stopped some of the selling pressure that we opened with", said Gene McGillian, head of market research at Tradition Energy.
Russian Federation itself cut its production at higher levels than it initially expected in January and February and plans to meet the goal to reach its commitment to gradually cut the output by 300,000 b/d by May.
Oil prices fell again on Thursday following the previous day's 5 per cent drop, with world benchmark North Sea Brent futures at US$51.87 late afternoon in the Arabian Gulf, down $1.24 on the day and the lowest since Opec reached its production deal at the end of November.
The OPEC wants higher oil prices, but lower market share can complicate its efforts to prop up prices with output curbs.
The Saudis also reaffirmed their commitment to the production cut deal, but also explicitly warned that if they don't continue to get cooperation or if they see cheating then they are not going to continue to fund the quest of lower production and global supply.
"The discussion will now center around whether or not Saudi Arabia is willing to give back market share to USA producers. or are they ready for yet another round of the market share war".
"Certain expansion is indicative of the alignment between the United States of America, under the Trump administration, and the Kingdom's energy strategies and policies", the minister said. "We are not those who imposed the sanctions", he said. By independent accounts, those targets have mostly been met, although some producers, like non-OPEC Russia, have fallen short. But refinery utilization will recover in coming weeks, and within a couple of months refinery demand should increase by more than a million bpd relative to last week's demand.
Al-Falih also said Saudi Aramco's pending IPO, planned for next year, will knit the state-owned company more closely into the global economy.