re: Crude below $50

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Now the part about the Saudi's is complete and utter ignorant bullshite. I have seen more idiots echo this without even bothering to look up facts.

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you want facts???

supply is much higher than demand

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As prices slid, many observers waited to see whether OPEC, the world's largest oil cartel, would cut back on its production to prop prices up. (Many OPEC states, like Saudi Arabia and Iran, need high prices to balance their budgets.) But at its big meeting in November, OPEC did nothing. Saudi Arabia didn't want to give up market share, and it hoped that lower prices would help throttle the US oil boom. That was a surprise. So oil went into free-fall

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The oil price crash is now upending the global economy, with ramifications for every country in the world. Low prices are excellent news for oil consumers in places like Japan or the US, where gasoline is the cheapest it's been in years. But it's a different story for nations reliant on oil sales. Russia's economy is facing a potential meltdown. Venezuela is facing serious unrest. Even better-prepared countries like Saudi Arabia could face heavy pressure if oil prices stay low.

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That brings us to OPEC, a collection of oil-producing nations that pumps out about 40 percent of the world's oil. In the past, this cartel has sometimes tried to influence the price of oil by coordinating either to cut back or boost production.

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At its big meeting in Vienna on November 27, there was a lot of heated debate among OPEC members about how best to respond to the drop in oil prices. Some countries, like Venezuela and Iran, wanted the cartel (mainly Saudi Arabia) to cut back on production in order to prop up the price. These countries need high prices in order to "break even" on their budgets and pay for all the government spending they've racked up:

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On the other side of the debate was Saudi Arabia, the world's second-largest crude oil producer, which was opposed to cutting production and willing to let prices keep dropping.

Why was that? For one, officials in Saudi Arabia remember what happened in the 1980s, when prices fell and the country tried to cut back on production to prop them up. The result was that prices kept declining anyway and Saudi Arabia simply lost market share. What's more, the Saudis have signaled that they can live with lower prices in the short term

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In the end, OPEC couldn't quite agree on a response and ended up keeping production unchanged. "We will produce 30 million barrels a day for the next 6 months, and we will watch to see how the market behaves," said OPEC Secretary-General Abdalla El-Badri after the meeting.

That caused the price of oil to start crashing even further. The price of Brent crude went from $80 per barrel to $70 per barrel in just a few days. And it kept tumbling to down below $60 per barrel by mid-December.

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For all intents and purposes, OPEC is now engaged in a "price war" with the US. What that means is that it's relatively cheap to pump oil out of places like Saudi Arabia and Kuwait. But it's more expensive to extract oil from shale formations in places like Texas and North Dakota. So as the price of oil keeps falling, some US producers may become unprofitable and go out of business. And the price of oil will stabilize. At least that's what OPEC members hope.

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Saudi Arabia: We will never cut production


more facts

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Saudi Arabia has a tough message for oil producers hurting from the price crash: We'll never cut our output.

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"We are going to continue to produce what we are producing, we are going to continue to welcome additional production if customers come and ask for it," al-Naimi said.

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"If they want to cut production they are welcome, we are not going to cut, and certainly Saudi Arabia isn't going to cut," al-Naimi said. " [That] position we will hold forever, not [just] 2015."

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Well capitalism sucks. Deal with it.

And by sucks I mean it's great. These are the boom and busts that we sign up for. Save 20% of your income yearly and live within your means and you'll most likely survive. Become leveraged like Bear Stearns and you get gored.

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Just what do you think is driving prices if it is not "normal" market forces?

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OPEC, and specifically Saudi Arabia, selling their oil cheaper in order to drive out US shale oil. They are intentionally selling at a lower price in order to retain their market share.

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The decision by Saudi Arabia, the world’s biggest oil exporter, not to cut oil production and play the role of swing producer to stabilize oil prices is also costing the oil kingdom. Saudi Arabia recently released a 2015 budget showing a $38.6 billion deficit, its largest ever, projecting a significant decrease in oil-generated revenue. But Saudi Arabia has accumulated $750 billion in foreign currency reserves and has signaled it is willing to spend its cash hoard and put it on the line in this global oil battle.

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LINK

They are selling at a price which hurts their bottom line, but they're doing so in order to preserve their control of the market (refusing to cut production). I can't say I blame them necessarily...it is what it is...

I suppose it's inaccurate for me to say that supply/demand (normal market forces) are not driving the price down, but the supply is being kept high, and the price low, even to the detriment of the suppliers for the purpose of squashing their competition. I would consider this "abnormal".

My company is making significantly more money because of cheap feedstock; I am dealing with it.

People knew what they signed up for in O&G industry; it's dumb to complain during a downturn. It's just funny to watch the same vaginas that complained endlessly about gas prices now telling other people to quit complaining & deal with it.

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you want facts???

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Supply is higher than demand, that is true. But all of what you quoted about the Saudis is some truth but not all of it. Yes, they want to maintain their market share and grow it, but a lot of their projects have nothing to do with making money as the #1 driver. They have many social agendas that they have to continue and many of the plants/projects that are ongoing and about to start cannot just simply shut down.

Billy Joe oil worker on facebook because they paid too much for their F350 & now can't afford to eat, duh.

That seems to be the common sentiment here. I really haven't seen anyone complaining, but a number of the anti-oil people in here would lead you to believe differently.

I understand that, however I was responding to the poster that called my accusation that SA was keeping the spigot open utter bullshite, and that I didnt know what the facts were...I posted the fact for him

People who are in South LA and say they will not be affected because they do not work in the oil industry I assume were not around in the early 80's.

TgrBait, I live in NO and I know a ton of people that went crazy of the last few years due to oil prices and a short term view that this will never end. Smart, well educated people. And now they wonder how they'll be able to afford their lifestyles. And the cut backs DON'T have to be so hard.