Tuesday, February 23, 2016

"Saudi Arabia Won't Cut Crude Output, Oil Minister Al-Naimi Says"

The FT's pull-quote is:
 “All I am saying is, we are not banking on cuts,” Mr Naimi said at the IHS CERAWeek conference.
While MarketWatch leads with:
Saudi Arabia's al-Naimi says he welcomes new additional supplies 
Here's the headline story from Bloomberg:
Saudi Arabia won’t cut oil production as other countries would be unlikely to assist in restraining output, leaving the burden of adjusting supply with high-cost producers, Oil Minister Ali Al-Naimi said.

“Not many countries are going to deliver” even if they promise supply curbs, al-Naimi said at the IHS CERAWeek conference in Houston Tuesday. An accord last week to freeze the oil production of Saudi Arabia, Russia, Qatar and Venezuela at January levels is “not like cutting production, that’s not going to happen.”

Instead, high-cost producers will have to “lower costs, borrow or liquidate” to cope with the slump in oil prices, al-Naimi said, adding that he doesn’t know when the current rout will end. This is a “more efficient” way for the market to rebalance than cuts by low-cost producers like Saudi Arabia, which would only delay the “inevitable reckoning” needed for supply and demand to realign, he said.

The Feb. 16 freeze agreement reached in Doha marked the first sign of cooperation between OPEC and non-members since oil prices began their long decline in 2014. Even as crude dropped about 70 percent to 12-year lows, Saudi Arabia insisted that other producers would have to join in before it considered curbing production.

Al-Naimi said the accord is “the beginning of the process” and that producing countries will gather again in March. Major exporters will cooperate, he said.

Further Steps
After the agreement was announced, al-Naimi suggested the freeze was a prelude to “other steps.” The comments, reiterated by other officials outside the kingdom, had fanned speculation that the government in Riyadh was dropping its resistance to production cuts....MORE
April futures now down $1.66 at $31.73.

Earlier today:
Oil Chartology: Been There, Done That
"Effects of Inventory Announcements on Crude Oil Price Volatility"
Oil Drops After Iran Slams OPEC Production 'Freeze' Proposal As "Ridiculous"