Latest on Oil and OPEC
13 Jan, 2015
The market fell more than 4 percent following yesterday’s close, reacting to comments by the United Arab Emirates’ energy minister and a Goldman Sachs report suggesting oil companies could default on debt if barrel prices remain in the $40 range for six months or more.
According to UAE minister Suhail Al Mazrouei, his country plans to expand capacity even as American explorers announce drastic cuts in the coming year. He went on to say OPEC “cannot continue protecting a certain price,” sapping strength from the already deflated market.
Libya’s rival faction was expected to meet with the nation’s internationally-recognized leaders in Geneva this week as a part of UN-hosted negotiations, but a spokesman for the Tripoli-based legislation instead announced a vote, scheduled for Sunday, determining whether the group will participate in discussions at all. If negotiators successfully broker a peaceful resolution, production in the region could surge by roughly a half million barrels a day, further dampening the global market.
Less than a week after Venezuelan president Nicolás Maduro promised $20 million in financial aid from China, he’s announced the receipt of several billion dollars from unnamed Qatari banks, covering the cost of much-needed imports through 2016. As the world’s riskiest investment, Venezuela’s trading in all its favors to remain afloat while crude oil finds its footing.
WTI crude futures fell 60 cents a barrel this morning to $45.47, which is an improvement from overnight trading below $45 a barrel. Diesel futures shed nearly 4.8 cents a gallon at $1.6065 while gasoline futures slid only 2.6 cents a gallon to $1.2482.