Doha Talks
We will have a battle over Sentiment versus the Fundamentals in the Oil Market on Monday. It will be interesting which dynamic moves price once the initial dust of the failed Doha Agreement clears.

DOha Talks

0:00readings this is econ matters it is a both 17 2016 and we’re going to talk
0:06about the oil market so talks with the OPEC ministers in Doha ended without
0:17agreement and interesting to sort of trying to analyze what was going on here
0:24so late Friday there is Peter aidid news coming out from the prints at this place
0:30he wasn’t doing a deal without a red but then late Saturday night there was a
0:38draft deal floated on task a Russian source and it looked like there was a
0:43deal for a gentleman’s agreement are soft agreement that was going to take
0:48place in the meeting and the meeting started and Saudi basically scuttled at

Doha Talks
0:55the start they tried all the other members it looked like as this meeting
0:59went on for 10 hours looks like they tried every possible way to bend over
1:04backwards get somebody to agree to something there was used to know by by
1:08Saudi Arabia to what was going on here it looks like that this is pure politics
1:15that saudi arabia cannot be seen doing any deal that friendly terrain right now
1:24and that is more important given the low prices have come off the bottom they’re
1:29not quite as desperate and that trumps the day a day in the end you know they
1:34must have certain threshold and when you’re really desperate all the sudden
1:38you know revenue trumps politics while the price of oil recovered
1:43substantially off the bottom and politics trumping today and it’s sort of
1:49like the corollary between russian people regardless of how bad russia’s
1:54economy is or has been hurt by some of the things that he does as long as he’s
1:59being seen to be standing tough that Russia portraying a tough image that
2:06they’re invading countries and represent teen you know the old guard of russia
2:10being a truck super power as long as that images sort of portrayed it plays
2:16well at home and I’m guessing it’s what plays well at home and I’m guessing be
2:20tough against Iran or not seem to do any deal to get to favor a special treatment
2:25turnaround is more important to saudi arabia Paula little officials right what
2:31plays well at home than getting the current price cuz it off the bottom I’m
2:36guessing that’s what’s really in play here and I’m guessing furthermore in
2:41trying to analyze the reason they continue when they change in agreed
2:46internally that they weren’t going to ever do deal with around then the only
2:51reason they continued with
2:53going to this mean was to save face you know to show that old being a property
3:01of OPEC member and you know we’re not the one that cancels the meeting
3:06basically and

Doha Talks
3:08in maybe there is an outside chance that Iran would change their mind or ran
3:14would agree to freeze or that the other members were somehow could get here and
3:24I’m guessing it really didn’t have a Rand made their case for months ago they
3:31haven’t changed it
3:33Saudi Arabia Venezuela Russia there was an agreement a tentative agreement greed
3:39after they knew iran’s stant so it’s obvious who changed here and it wasn’t
3:45ran around never agreed to anything and its Saudi Arabia that changed and I’m
3:51guessing the price being off the bottom helped and maybe there’s some political
3:56conflict in some of the regional disputes that somehow the back channels
4:00is affecting this deal that could be as well but I’m just seen Saudi Arabia just
4:07didn’t want to be seen as the bad guy so they went along with the facade longer
4:14by showing up to the media not being the one that canceled because frankly they
4:19could accounts this medium definitely three weeks ago they had no intention of
4:25doing a deal and when Iran didn’t show up that could account of the agreement
4:31they could account for this last week when around said we weren’t a dream so

Doha Talks
4:37they knew their position in some sense they’re just saving face with a no pac
4:40as to not really piss off the other OPEC members but in my mind at another black
4:46eye for Saudi Arabia it can’t be helping with some of their fellow members
4:50relationships and it’s just another case of saudi screwing a bunch of their
4:56fellow OPEC members so all that said it doesn’t look like 007 setting up for
5:03easy short which would normally be the case because as I said the deal is a
5:10pure sentiment deal it had no real bearing on the funding
5:13and we get this news out of kuwait way crude output dropped sixty percent as
5:20all workers strike over pay these are the side effects of having lower oil
5:25prices this is why kuwait was trying so hard for a deal this is why all those
5:30other members of opec and Russia or even at the meeting this is why it took 10
5:35hours trying to twist his arm right that there’s another tenant side effects that
5:44as we always say there’s no cure for low prices like the low prices so wait for
5:51production tumbled by 60 percent as its refinery scale back operations as a
5:56state oil company took emergency measures to cope with the first day of
6:00an open-ended labor strike the OPEC member’s production dropped to 1.1
6:06million barrels a day the chief executive from finance spokesman at
6:11Kuwait Oil Company said so great
6:18produced 2.1 million barrels a day last month making it OPEC’s fourth-largest
6:23member wild world wide supply exceeds demand by one point six million in the
6:28first quarter according to the IAEA so literally they’ve gone from 2.81 to 1.1
6:35million barrels a day the plunging kuwait’s output it just shocking Edward
6:40combines analyst at dubai-based Emirates said by phone that would take care of
6:45the surplus right there there could be quite a bit of upside militant Hamas
6:50so why the members of the 30,000 oil and petrochemicals industry workers
6:57Confederation they’re protesting their cutting wages and benefits right so
7:04about 6,000 workers walked off the job when the strike began Sunday
7:08this is the unintended consequences of low oil prices you’re getting lower
7:15revenue you can afford to pay the workers so you reduce benefits and wages
7:20and then fixed production because they go off and quit by these are the reason
7:28there’s no cure for low prices low prices eventually she’ll workers are
7:34going to quit the us- production is going to start dropping every day lows
7:41below 40 shelf productions gonna drop more and more because it’s just an
7:47unsustainable level the world market was not built for $40 oil and these wages
7:55and benefits being cut is now finally showing up and as a result sixty percent
8:04cut production just goes offline just like that and you’re starting to see
8:08some other side effects that ultimately we think are going to affect production
8:14so all these countries cannot afford to do the proper maintenance and take off
8:20line cause they’re all running as much as they possibly can to make up for
8:23lower price by increased volume and so they’re not doing the proper Minister
8:28not investing in the problem is they’re not testing future and ultimately this
8:33is going to hurt production all over the world and that’s why the reason that the
8:37market is going to rebalance and demand is gonna eventually overtake declining
8:46production and with all

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