{"id":6409,"date":"2017-11-29T21:21:12","date_gmt":"2017-11-29T21:21:12","guid":{"rendered":"http:\/\/newscoverage.org\/?p=6409"},"modified":"2017-11-29T21:21:12","modified_gmt":"2017-11-29T21:21:12","slug":"energy-markets-eye-opec-summit-nov-30","status":"publish","type":"post","link":"https:\/\/newscoverage.org\/index.php\/2017\/11\/29\/energy-markets-eye-opec-summit-nov-30\/","title":{"rendered":"Energy markets eye OPEC summit, Nov. 30"},"content":{"rendered":"<p><strong>By Robert Frank<\/strong><\/p>\n<p><a href=\"http:\/\/www.newscoverage.org\">www.newscoverage.org<\/a><\/p>\n<p>What has changed in the energy sector? Plenty, according to Helima Croft.<\/p>\n<p>\u201cAfter they Saudis fired their oil minister Ali Al-Naimi in 2016, they switched from seeking market share to trying to put a floor on prices through active market management,\u201d said RBC Capital Markets\u2019 managing director and chief commodities strategist.<\/p>\n<p>The problem, for now at least, is that whenever crude prices rise to $50 a barrel, American domestic production ramps up.<\/p>\n<p>\u201cEven if the company\u2019s cash flow is negative, at $50, it will still hedge its production,\u201d she said. \u201cThat puts a ceiling in prices. The Saudis want oil priced at $60, but having witnessed it sink to $27, they are will to take $50.\u201d<\/p>\n<p>Eventually, this dynamic will run its course, because the shale oil boom stunted long-term investment in conventional extraction.<\/p>\n<p>\u201cWe\u2019re still seeing the product of previous investments,\u201d Croft said. \u201cKhazakhstan production is coming online, plus we\u2019re seeing more production from Brazil\u2014but several years out, we\u2019re not going to have additional conventional production. Once shale alone is insufficient to balance the market, we\u2019ll see the prices tighten.\u201d<\/p>\n<p>Nearer term OPEC&#8217;s meeting in Vienna, Nov. 30, will prove decisive. If the cartel continues to hold together and extends its supply management agreement from March to June or opts for even deeper cuts, the repercussions will be profound for Canadian producers.<\/p>\n<p><a href=\"https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-6375 aligncenter\" src=\"https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-300x166.jpg\" alt=\"\" width=\"300\" height=\"166\" srcset=\"https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-300x166.jpg 300w, https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-768x425.jpg 768w, https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-1024x567.jpg 1024w, https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5-720x399.jpg 720w, https:\/\/newscoverage.org\/wp-content\/uploads\/2015\/12\/helima-croft1-5.jpg 1268w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p style=\"text-align: center;\"><strong>RBC Capital Markets\u2019 managing director and chief commodities strategist Helima Croft<\/strong><\/p>\n<h3><strong>Russia reinforces role<\/strong><\/h3>\n<p>Russia has also engaged in a hitherto-unheard of leadership role, she suggested, having witnessed Russia\u2019s oil minister standing shoulder to shoulder with his Saudi counterpart to announce OPEC\u2019s sea change in policy.<\/p>\n<p>\u201cIt went from saying \u2018under no circumstances will we cooperate\u2019, to where the Russians effectively co-preside OPEC,\u201d Croft observed.<\/p>\n<p>Another significant wild card is Venezuela. With shrinking GDP, triple-digit inflation, scarce essential goods and a possible famine waiting in the wings, South America\u2019s biggest oil-producer faces imminent economic collapse.<\/p>\n<p>\u201cWhat does this do to oil production?\u201d she asked. <em>\u201cPetr\u00f3leos de Venezuela<\/em> (PDVSA) has about $3.5 billion in sovereign debt coming due now. It doesn\u2019t have the cash to pay that debt. Could PDVSA default? Russia has bailed it out before. I\u2019m inclined to expect that Russia will do so again\u2014but the markets have priced-in default.\u201d<\/p>\n<p>Venezuela also faces the prospect of tighter American sanctions that would further impair its ability to export oil.<\/p>\n<p>\u201cIf fewer Venezuelan barrels end up entering the United States,\u201d Croft said, \u201cthe net beneficiary will be Canadian heavy.\u201d<\/p>\n<p>American foreign policy toward Iran is another wild card. Non-certification that Iran is compliant with the nuclear deal signed during the Obama administration would means that Congress will have to decide whether it wants to re-impose sanctions. Extraterritorial sanctions would make Iran less attractive to investors and have a noticeable impact on its ability to sell oil and potentially cap its production gains.<\/p>\n<p style=\"text-align: center;\"><em>This report first appeared in the Fall 2017 edition of Canadian Real Estate<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Robert Frank www.newscoverage.org What has changed in the energy sector? Plenty, according to Helima Croft. \u201cAfter they Saudis fired their oil minister Ali Al-Naimi in 2016, they switched from seeking market share to trying to put a floor on prices through active market management,\u201d said RBC Capital Markets\u2019 managing director and chief commodities strategist.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6409","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Energy markets eye OPEC summit, Nov. 30 - Newscoverage<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/newscoverage.org\/index.php\/2017\/11\/29\/energy-markets-eye-opec-summit-nov-30\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Energy markets eye OPEC summit, Nov. 30 - Newscoverage\" \/>\n<meta property=\"og:description\" content=\"By Robert Frank www.newscoverage.org What has changed in the energy sector? 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