It’s Black Friday for OPEC

It’s Black Friday for OPEC. 
            —
Crude is on sale!  
            —
   Saudi Arabia is undermining the future of OPEC’s very existence.   Saudi Arabia has a low cost, arguably around $10 USD/barrel of extracting crude from the ground.   Saudi Arabia (SA) is so focused on maintaining market share, … and putting USA shale crude exploration and production companies out of business, … that Saudi Arabia is failing to consider the future consequences of its actions to itself and to its fellow OPEC membership.
OPEC, including Saudi Arabia, uses its crude revenues to subsidize their economies.  At USD $40 per barrel, most of OPEC is basically selling crude at cost of, or below cost of, production with NO cash cushion monies for exploration and production replacement costs … like land leases or purchases, with no additions to capital for future wells or infrastructure.   Crude revenues are below government budget expenditures; so, OPEC members, including Saudi Arabia, are drawing down cash reserves, and seeking loans.
OPEC fails to grasp USA refiners have learned USA shale crude must be blended with other heavier crudes and there are limits to the amount of USA shale crude that can be added to the mix without causing serious problems in the refining process.  Adding USA shale crude to Canadian tar sands crude is one option.  The USA has approved exchanging barrel per barrel, USA shale crude for Mexico’s crude … again, for blending purposes.  So, USA shale crude exploration and production, due to refining “blending” limits, is not the threat OPEC perceives it to be.
OPEC, especially Saudi Arabia Ministers … keep publically inviting non-OPEC exploration and production companies to discuss limiting production (to boost prices.)   While not specifically calling out USA companies … the message, IMHO, is clearly reaching out to USA companies.  Which begs the question, as to what part of USA Laws, Rules, and Regulations is it that OPEC does not get?  While the DOJ might not be able to drag OPEC into USA Courts for crude price collusion and/or manipulation … the DOJ will not be so hampered in dragging any USA company that foolishly takes OPEC up in colluding on any such tactics.
Crude BUYERS are NOT paying attention 
   As far as all the talk, and constant HYPE on crude in storage, including wording like “glut”, “over-supply”, “filling storage to tank tops” … no one is ASKING the buyers, especially the end users, the REFINERIES, why they are still buying OPEC crude?  Buyers are BUYING, paying for, taking possession of, transporting, and stuffing OPEC crude into storage.  WHY?  Clearly the BUYERS are NOT paying attention to rhetoric that includes “glut”, “over-supply”, “filling storage to tank tops” … WHY NOT?
 Check out the US Energy Information Administration webpages for yourself:
  Per the US EIA, not counting the Strategic Petro;eum Reserve (SPR), as of 11/20/2015,  the USA had 30.5 days of crude in storage …

 

 Crude Oil in 2015

  • 10/15, 10/23, 10/30, 11/6, 11/13, 11/20, History 
  • 30.7, 31.1, 31.2, 31.2, 30.8, 30.5, 1982-2015
 Gasoline
  • 10/15, 10/23, 10/30, 11/6, 11/13, 11/20, History  
  •   24.2, 23.9, 23.4, 23.0, 23.2, 23.7, 1991-2015
 Kerosene-Type Jet Fuel 
 
  • 10/15, 10/23, 10/30, 11/6, 11/13, 11/20, History 
  • 25.6, 25.1, 24.1, 22.8, 22.6, 23.3, 1991-2015
 Distillate Fuel Oil
  •  10/15, 10/23, 10/30, 11/6, 11/13, 11/20, History  
  •   37.7, 35.8, 35.9, 35.5, 34.6, 36.1, 1991-2015
 Propane/Propylene
  • 10/15, 10/23, 10/30, 11/6, 11/13, 11/20, History  
  •   112.9, 106.0, 106.9, 108.9, 113.7, 121.4, 2004-2015
  As he saying goes, the CURE for low crude prices … is low crude prices.  The short-sighted OPEC strategy can only lead to higher crude prices in 2016 … projections point to $70 to $75 USD per barrel crude by November/December 2016.
—————————- Friday, 11/27/2015
 Please read:
  
  Have a great day investing, or trading … 
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