from MacroBusiness: 'Crude oil prices could crash more than 10%...

from MacroBusiness:

'Crude oil prices could crash more than 10% if the Organization of the Petroleum Exporting Countries fails at implementing a plan to curb output when it meets later in November, Goldman Sachs warns.
In a note dated Oct. 31, the Wall Street analysts said a coordinated deal to limit oil production is looking increasingly unlikely, “with weakening oil fundamentals warranting oil prices in the low $40s/bbl in our view if OPEC is unable to deliver a convincing agreement.”
“Even if the fear of such low prices leads OPEC to deliver an agreement on November 30, we reiterate our view that the odds of it succeeding are low,” the analysts, led by Damien Courvalin and Jeffrey Currie, said in the report.
…A technical meeting between cartel and non-OPEC members over the weekend in Vienna ended inconclusively as the producer nations weren’t able to resolve their disputes on output levels.
“The lack of progress on implementing production quotas and the growing discord between OPEC producers suggests a declining probability of reaching a deal,” the Goldman analysts said.
…Most analysts also expect Iran, Libya and Nigeria to be exempt from a production freeze or cut, as those countries currently are seeking to ramp up output after years of disruptions due to sanctions and militant attacks.
Meanwhile, Russian and overall OPEC production has continued to climb, which means a potential output deal is unlikely to make any decent draw in inventories in the first half of 2017, Goldman said.
“Net, both the probability of a cut being announced and the odds of it successfully reducing inventories have declined over the past week, in our view,” the analysts said.
I do not see talks failing. Saudi will have to act unilaterally (or at least with its client states) to cut even if nobody else helps. If not then oil is going back to the $20s and a major global shock will be upon us. The best case outcome that I can foresee is in the realms of one million barrels per day less.
That’s already been swamped by Nigeria and Libya, and the former is back at full production today:
Nigeria’s oil production is nearly back to normal following a sharp drop earlier this year due to rebels attacking pipelines, the oil minister said Tuesday.
“The reality is that as of today and this morning, we are at 2.1 million barrels production. That’s substantial,” Minister of State for Petroleum Emmanuel Kachikwu said in the nation’s capital of Abuja.
Nigeria normally produces around 2.2 million barrels per day (bpd), but output dropped to a low of 1.4 bpd this year due to rebels attacks.
Addressing the press after a meeting between Nigerian President Muhammadu Buhari and representatives from the oil-producing Niger delta region, Kachikwu said “a lot of behind the scene engagements” were paying off.
“Part of the expectations by 2017 is to target zero shutdowns as a result of militancy,” Kachikwu said, describing the talks as “fairly good, fairly civilised dialogue”.

So, Macrobusiness range of oil for the foreseeable future remains $45-55 as US shale not Saudi continues to act as the marginal cost producer.

http://www.macrobusiness.com.au/201...tm_term=Daily LNG and oil price update bashed