EMEA News
Putin Praises Crude Cutback Extension, but Oil Deal Doubters' Concerns Continue
Once again this week, rhetoric from the Organization of the Petroleum Exporting Countries (OPEC) supporters for its nine month oil cutback extension was matched by yet more criticism that the cartel is irrelevant in a rapidly changing industry landscape, with one respected strategist going so far as to dismiss it as "crooked."
That incendiary descriptive was delivered by Todd Horwitz, chief strategist at Bubba Trading, who told Bloomberg television that OPEC no longer matters to the world market - and especially not to U.S. interests: "We're not being held hostage by OPEC here with West Texas Intermediate; we've got frackers willing to pump, so they're going to try to put the price artificially higher, then our frackers are going to keep pumping, and you can see the rig counts are going up week after week.
"OPEC is a phony, crooked organization anyway, they don't follow the guidelines they set to begin with, so I think OPEC has no meaning other than a quick pop here and there."
Horwitz said that considering the price trajectory is on the downside, for him oil won't be a buy until it hits $40.
Horwitz's pessimism is shared by Tracy Alloway, executive editor for Bloomberg Markets, who reiterated that many people were hoping for OPEC to announce deeper cuts along with an extension, which is widely perceived as necessary given the rampant production of nations around the globe - many of whom are OPEC members.
She added, "After this last meeting, there's a lot of uncertainty about what exactly they're trying to do," and she quoted others sources complaining that OPEC has still not outlined a much-promised exit strategy for the current extension agreement or identified what stocks they're targeting.
Alloway then quoted Olivier Jakob, managing director of Petromatrix, as saying "OPEC has given up on rebalancing inasmuch as it means bringing those stockpiles down to their long term trend."
But as far as OPEC supporters are concerned, all is well and the cartel's extension is just what the market ordered: speaking in the Kremlin on Tuesday, Russian president Vladimir Putin called the agreement very significant and "our coordinated actions helped stabilize the situation on the world hydrocarbons market."
He also repeated an invitation for Salman bin Abdulaziz, king of Saudi Arabia, to make his first visit to Russia: "We're grateful to you for the idea and for working together on joint actions between OPEC countries and countries outside the cartel."
For his part, Mohammed bin Salmon, deputy crown prince for the Saudis, earlier stated that the OPEC cutbacks provide a "solid" foundation for the market and energy prices as well as "good opportunities to build a long-term strategic future."
Earlier this week the Financial Post came close to matching Horwitz for an incendiary condemnation of OPEC's efficacy, noting that while the Saudis' earlier gambit to increase production and quash U.S. shale growth "was a risky, hard gamble, not for the feint of heart, and victory was far from assured....today OPEC looks like it's playing to neither win nor lose; the game is over."
