backdoc » October 27th, 2014, 9:11 pm
AS WE AWAIT INTERNATIONAL STATUS WITH THE DINAR, REALIZE WORLD MARKETS ARE CHALLENGED GREATLY BY DEFLATION.
AT LEAST 8 COUNTRIES ARE IN SERIOUS TROUBLE.
THE PYTHON,(IMF) WILL BE READY FOR THE BAILOUTS NEXT YEAR IF NEEDED.
THIS WEEK ENDS THE QE PROCESS OF MONEY PRINTING.
AS A RESULT THE DOLLAR WILL PROGRESSIVELY INCREASE AGAINST MANY WORLD CURRENCIES.
THIS IS LARGELY WHY OIL PRICES MUST ADJUST, SINCE THE WORLD NO LONGER THINKS OF OIL AS JUST A COMMODITY, IT'S A CURRENCY !!!
IMHO THE STOCK MARKET WILL FOLLOW AND REPRICE AS WELL.
FINALLY GOLD WILL ADJUST AS WELL.
IF YOU UNDERSTAND AND FOLLOW THIS PROCESS FROM THE ARTICLES OUR FAMOUS NEWS HOUNDS HAVE GIVEN YOU, THERE IS POTENTIAL TO MAKE YOUR NEW WEALTH BE PRESERVED OR GROW! WITHOUT UNDERSTANDING THE MOVE TO "THE NEW REALITY" INVESTORS,TRADERS,ECT. WILL BE CRUSHED FOR LACK OF THIS KNOWLEDGE.
NOVA DID A GREAT JOB EXPLAINING THIS! ( On the CC tonight) DOC
Why OPEC's losing its ability to set oil prices
Eddie Seal | Bloomberg | Getty Images
OPEC 's glory days of steering global oil prices may be at an end.
Read More Oil could slide further, but where's the bottom? U.S. shale oil will replace the Organization of the Petroleum Exporting Countries as the first-mover "swing producer," according to a Goldman Sachs report from the weekend-meaning OPEC is losing its power to set global prices for crude.
Saudi Arabia, the world's largest oil exporter, no longer has "the ability to push prices lower than the production costs of U.S. shale" because any cuts from the kingdom would "accommodate the further expansion of U.S. shale, as well as reduce Saudi profits," Goldman said.
The shift in pricing power became apparent to Goldman when U.S. shale's spare capacity, at around 5 million barrels per day, exceeded Saudi Arabia 's spare capacity of 1.5 million. Spare capacity refers to the amount of crude a country is able to produce in 30 days in case of an emergency.
Read More 'Bipolar' markets lose the fear; are they ready to relax?
This trend has been a long time coming, but the tipping point started this year with significant cuts in West African oil exports to the U.S., said John Kilduff, energy analyst and founding partner of commodities investment firm Again Capital. U.S. shale oil has replaced West African imports, which have been redirected to Asia.
The balance was further tipped toward the U.S. when production rebounded in Libya and Iraqdespite political instability, adding to an already oversupplied market, Kilduff added.
OPEC pumped 30.6 million barrels of crude oil per day in September, a jump of 400,000 barrelsfrom August that was driven by the Libyan output rebound, found Platts, a global energy information service.
Read More Despite washout, hedge funds not bailing on energy
OPEC's loss in pricing power is a consequence of not taking U.S. producers more seriously and cutting prices earlier for clients, said Phil Flynn, senior energy market analyst at Price Futures Group.
"Only a year ago, OPEC was still in denial, but with the slowing global economy, they can't laugh off U.S. production anymore," Flynn said.
By 2019, U.S. shale oil production will jump to 9.6 million barrles per day, from 8 million now, according to forecasts from the Energy Information Administration. In comparison, Saudi Arabia currently produces 9.6 million barrels of crude oil a day.
All that said, market watchers across the board expect OPEC to remain highly influential when it comes to the price of oil.
The group will likely cut production when the core countries meet in Vienna on Nov. 27, according to Kilduff. "OPEC is in the process of playing chicken with the market," he said. "But their hand will be forced and they will eventually cut, with the Saudis taking on the bulk of it."
OPEC has absorbed lower oil prices up until this point, declining to cut output in a bid to maintain market share.
Read More How the US shale boom will be felt around the world
"The main reason why OPEC is not cutting production is they realize that U.S. shale is a serious threat to their global oil space," Flynn said.
The cyclical nature of the oil industry makes it unlikely that OPEC has lost its price-setting power permanently, Kilduff said: "There's a boom, bust and a new era upon us all the time. So, the jury's still out on the long-term sustainability of U.S. shale production."