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OPEC holds production targets, gold and other commodity prices drop, surprise German unemployment fall

OPEC holds production targets, gold and other commodity prices drop, surprise German unemployment fall

By BusinessDesk

Oil slumped, and so did energy stocks, after OPEC ministers decided to maintain the group’s production targets, instead of curbing supply to help a slide in prices.

West Texas Intermediate crude sank more than 6 percent to US$69.05 a barrel while Brent crude slid below US$72 a barrel for the first time in more than four years.

The exporting group opted to keep its collective output ceiling of 30 million barrels a day.

“Recording its concern over the rapid decline in oil prices in recent months, the Conference concurred that stable oil prices — at a level which did not affect global economic growth but which, at the same time, allowed producers to receive a decent income and to invest to meet future demand — were vital for world economic wellbeing,” OPEC said in a statement.

“Accordingly, in the interest of restoring market equilibrium, the Conference decided to maintain the production level of 30.0 mb/d, as was agreed in December 2011.”

Shares of energy companies including BP and Royal Dutch Shell also slumped.

The decision will likely push prices even lower.

"Oil prices are now completely in the hands of the market," Dominic Chirichella, director of New York-based Energy Management Institute, told Reuters Global Oil Forum.

Other commodities including gold, platinum and aluminum also declined.

“The entire commodity complex is having a reaction to crude and the US dollar strength,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, told Bloomberg News. “There is that potential on the headlines and less Petro dollars available to invest in the commodity space.”

Meanwhile, European stocks rose amid better-than-expected economic data from German, the region’s largest economy.

The Stoxx Europe 600 Index ended the session with a gain of 0.4 percent, while Germany’s DAX Index finished the day with an advance of 0.6 percent. France’s CAC 40 rose 0.2 percent. The UK’s FTSE 100 Index fell 0.1 percent.

A report showed Germany’s jobless rate fell more than expected this month, declining to a record low 6.6 percent that matched October’s downwardly revised rate. Another report detailed that the country’s consumer prices rose the least since 2010.

A report from the European Commission showed a surprise gain in economic sentiment in the euro zone. An index of executive and household confidence edged higher to 100.8 this month, up from 100.7 in October.

US markets were closed for the Thanksgiving holiday. Many offices will be closed on Friday too, when Wall Street will close early. On Wednesday, the Dow Jones Industrial Average and the Standard & Poor’s 500 Index closed at record high, lifting their gains for 2014 to 9.9 percent and 14.3 percent respectively.

If you want to catch up with all the changes from yesterday we have an update here.

To check what's scheduled today see our Economic Calendar here »

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23 Comments

Oil slumped, and so did energy stocks, after OPEC ministers decided to maintain the group’s production targets, instead of curbing supply to help a slide in prices.

 

A consequence of this year's dramatic drop in oil prices, the shift is likely to cause global market liquidity to fall, the study showed.

This decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.

But no more: "this year the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations." Read more

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Wow, fascinating article. I had missed that one, ZH has been overrun with rants a bit of late I thought.

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ZH...oh dear.....yes rants indeed.....

I mean so many assumptions here,

"to a lesser extent Saudi Arabia too, which by glutting the world with crude, first intended to crush Putin, and subsequently, to take out the US crude cost-curve, may have Plaxico'ed both itself, and its closest Petrodollar trading partner, the US of A."

Has Saudi's output climbed significantly? in extremely short order to explain that deline in price? and by that I mean 3 or 4 or more mbpd? not from what I can see. 

SA output, latest,

http://www.eia.gov/countries/country-data.cfm?fips=sa

The interesting one is the NET is down.

US shale is up a lot, true, but enough to cause this?

http://www.eia.gov/countries/country-data.cfm?fips=us

Doesnt look like it.

CNBC

http://www.cnbc.com/id/102219498#.

see's oil at $35 a barrel? oh boy, shale viable then? bet not.

http://oil-price.net/en/articles/oil-price-fall-threatens-us-oil-produc…

Lots of guessing/opinion, nothing real me thinks.

regards

 

 

 

 

 

 

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Wow, oil is approaching 2009 prices....

Just look at that graph for a trend, huge and ikky.

http://oil-price.net/

The Q is what will be the impact. So while some ppl with an attention span of a few months are happy petrol will get cheaper, hence not change their ways or worse go out and buy the F50/Hummer they always wanted......If compnaies stop drilling and even go bankrupt that just signals a steeper decline curve and sooner to me...

regards

 

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It is time for a little humility from you steven. Thousands of comments you have made here over the last many years regarding the supply and price of oil and the consequences thereof are being proved totally erroneous. Man up, admit it. You got it wrong. No weasling around, have some dignity.

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Does that mean NZ will be bringing out more V8's?

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Definitely not.  The word is out. Want cheap oil? Use less of it. We ain't gonna return to our wasteful ways anytime soon.

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Who the developed world? yet demand has been or was growing from China and India ie the developing world is taking on what we the developed world cannot afford to buy at $110 a barrel.

"we" yet the articles I see suggest Americans for instance are now buying humvees and F50s again.

 

regards

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No I have not gotten it wrong. I think you need to go back and re-read what I have written and the context. If you look those comments are, want to grow the world's economy 4% per annum? historically that entails more fossil fuel per annum, somewhere between 1 and 2.5% per 4%.  I see nothing to indicate we have managed to dis-associate that link in the parts of the economy that make real things.  Financial instruments of mass destruction "growing" GDP is nothing more than la la land make believe.

Supply of oil? in mbpd crude oil is still at around the peak got to in 2006 or so. So we amble along on a production plataeu.  Condensate and tight oil make up an increasing % of that total...

After the peak in price in July 2008 the demand collapsed and then  the price collapsed to $35 ish...signalling a huge recession under way. 

As Matt Simmons said he thought the world's economy and oil and its price would see saw along in and out of growth for maybe 3 occasions before the mainstream nderstand we cant grow any more.

So what do we see today?  well if it really is heading to $35 as CNBC says that looks a repeat of 2008/9 to me...

So no I have not got it wrong.

regards

 

 

 

 

 

 

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Weasel words stevie wonder. You remind me of a little rooster we had when I was a youngster. My Grandmother would say in her wonderful Scottish brogue, "I'm sure he thinks it's his crowing that makes the sun rise".  Small cock syndrome epitomised, perhaps?

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Now you are trying to be offensive.

Oh and why try and shoot the messenger? just ignore it if you dont like what I write, Im sure most of your thumbs up mates  do.  Unable to put together a counter-argument that bears scrutiny.

How about sticking to the real world, with real data. Go on put it up, lets see your reasoning, opinions and projections and especially where they diff to what you think my ones are.

Bet you are too afraid of being made to look a fool.

regards

 

 

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I don't wholly agree with steven but I do believe that we will see oil price shocks in both directions as oil supply and demand gets tighter. This is in alignment with steven's view of seesawing as he has previuosly stated.

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The seesaw declining saw tooth was/is Matt Simmons hypothesis, looks like he was correct on this so far. What he wasnt correct on was he thought oil could go to $300+ a barrel even $500. I think that has been proved wrong, ppl stop buying long before that at about when energy takes up 6% of GDP and a recession results. So in real terms $120USD is now probably the max we'll see before a recession ensues and the price collapses.

Matt Simmons also said he thought the world would take 3 such see saws before they/we realized the game was over, this might well be No2.

At best I can say I stand on the shoulders of giants, I just listen and examine the ideas to determine what makes sense to me.

Going to be interesting to see if they are right....looking "good" so far.

regards

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Oh please Steven. As has been pointed out to you the IEA clearly states there are "ample physical oil and liquid fuel resources for the foreseeable future". Your scrutiny bearing counter argument I recall was "the IEA are liars". Though I spose that makes a change from your usual baseless counter argument of calling me a liar.

 

And there there is the inconvienient EIA data of proven oil reserves going from 600 billion in 1980 to 1.6 trillion today. Proven reserves meaning technically and economically recoverable oil -  and a legal requirement for listed oil companies balance sheets. Though to be fair proven reserves will take a hit at $60 oil.

 

 

 

 

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The lie again of course is that its all about mbpd (and economic cost to extract) and not whats in reserve for the "forseeable future". Which if you think effectively  all gone by around 2050 isnt un-foreseeable, I think it is BTW.  Is that a lie? I think its a political machination, so yes a lie and a knowing one, I'll stand by that opinion.

I have explained numerous times on the 600B to 1.6T. The total amounts have not changed just the conventional crude has always been 600 (and probably not that actually) and the tar/tight the 1trillion and was acounted seperately. the fudge or lie is now that the EIA lumps them together with no adequate consideration of what can be economically got out at a price we can afford to pay.

Baseless lies? no you cherry pick data and obsolete quotes out of context, once or twice could be a mistake, but not you repeat them time after time, so yes I consider you in effect are a liar.  What words do you prefer? how about knowingly spreading a falsehood?

Sums your words up well me thinks,

"a lie. a downright falsehood"

synonyms: lie, fib, untruth, false statement, falsification, fabrication, invention, piece of fiction, fiction, story, yarn, made-up story, trumped-up story, cock and bull story, flight of fancy, figment of the imagination

 

regards

 

 

 

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Do the math Steven if as you suggest the total amounts have not changed since 1980 we would have run out ten years ago. What oil have we been using since ~2005 when your "probably not" 600B of "conventional" crude ran out?  What reason would there be to not include tight oil in proven reserves? Clearly it is technically and economically feasible to extract.

 

EIA proven crude oil reserves don't include :"(2) natural gas liquids (including lease condensate) (5) oil that may be recovered from oil shales, coal, gilsonite, and other such sources." To be included it must be exactable under existing conditions ie today - so suggesting it is unaffordable is also incorrect.

 

The IEA statement and EIA data is publically available (and current so why do your say obsolete)  to suggest it is a lie, political(?) or cherry picked is the sum of your argument? You are doing exactly what you were accusing others of earlier today.

 

 

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Misdirecting on "run out" again, or you simply lack the ability to read and reason.  No one said we would have run out ten years ago, what is a documented statistic is conventional crude oil daily output peaked in about 2005~2006 and has run flat ever since.  Run out as I keep repeating is 2050 or so, which is moot even if its that long away, which I think it isnt.

Indeed you answer my own point, pre-the adding on no one considered the tight & heavy oil anywhere near economically extractable, hence it was not included.  Then carte blanche with no real analysis on costs or ability to pay  the various US departments added them.  Consider that the Californian shale was added, yet its been downgraded something like 95% and looks to be un-extractable, great success rate that.  Simialr for many of the shale plays, the 'sweet spots"  have been extracted first, soon the companies will have to move onto the not so great and in turn the poor plays, the returns and output collapses will be way worse and cost more. 

Yes I consider IEA/EIA to in effect be lying, or at best putting forward an un-realistic picture of our "rosey" future. 

At the end of the day your investment decisions are your own, I have my view of the world based on what I consider reliable sources right now I consider their track record to be good and their data and conclusions accurate enough to work with, you do as you please. 

 

 

 

 

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The IEA/EIA are lying. Got it. Why do you quote the EIA in the comments further up? Do they only lie sometimes?

Also in reference to the EIA proven resrves being 600B in 1980 what did you mean by:

"The total amounts have not changed just the conventional crude has always been 600 (and probably not that actually)..."?

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I said you were cherry picking obsolete quotes on climate science, ie the BBC pieces have long been superceeded in scientists understanding, not oil.  EIA's data is fanciful it can only be obsolete if at one stage it was correct, I really doubt that.

I must admit you have a great ability to take things out of context and twist to a "new way" of "thinking", I bet you would make a great spin doctor.

regards

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Bit sensitive there steven. Did he hit a raw nerve.

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Same applies, put up your thoughts and logic on what going to happen instead of shooting the messenger because the message isnt what you want to hear.

regards

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It seems Snodgrass/Vera may have a split personality?? Must be all those Big Macs and sniffing petrol fumes. 

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Meanwhile Spain's youth un-employemnt is a staggering 54%

http://www.tradingeconomics.com/spain/youth-unemployment-rate

 

 

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