When it comes to nepotism, Mayor Richard J. Daley of Chicago, once famously said something like, "if you can’t help your sons out then you can kiss my backside" or words to that effect. In Saudi Arabia, a new day is dawning as they named Prince Abdulaziz bin Salman, King Salman’s son, the new Saudi Energy Minister.
While Prince Abdulaziz bin Salman is highly qualified, it is a sign that the House of Saud part of the old Saudi power sharing agreement between families is at risk as the Bin Salman clan consolidates more power. At the same time, the move is bullish for oil prices. Not just because it adds to uncertainty but because Prince Abdulaziz bin Salman is known as an oil production cutter. He has been instrumental in securing production cuts in the past and is in favor of more cuts in the future.
This is a key point as oil traders get ready for the meeting of the Joint Ministerial Monitoring Committee this week. The odds are that Prince Abdulaziz bin Salman will be working on Russia and other OPEC members to secure a big production cut to put a floor under oil once and for all. That may take some work as delegates are lowering expectations saying it is unlikely to recommend changes to the framework of the ongoing production cut agreement when it meets in Abu Dhabi. Yet an additional cut may be key as the Cartel, along with its co-conspirator Russia, may have to offset all the negative talk and warnings about demand. The IEA is warning that demand growth will fall to 1.0 million barrels a day from 1.5 million barrels. Yet there are reports of another rise in oil imports to China in August, with shipments 3% higher from July and nearly 10% higher in the first eight months of 2019 from a year earlier.
U.S. oil producers are still retracting. Baker Hughes reported that U.S. rigs fell by four oil rigs and two gas rigs. That puts the total number of active rigs at just less than 900 (898). This is 150 fewer rigs than the count of 1,048 one year ago. Rig Zone reported that Oklahoma led all states in losses, shedding five rigs. Texas dropped two rigs while Alaska dropped one rig. North Dakota was the only state to add rigs this week. It tacked on another three. Among the major basins, the Cana Woodford saw the most declines this week, dropping three rigs. The Permian lost two rigs and the Mississippian lost one rig. The Williston was the only basin to add to its rig count with another three rigs. At 427 active rigs, the Permian still accounts for nearly half of the nation’s total number of active rigs. In the United States drilling companies cut the number of operating oil rigs for a third week in a row last week.
Natural gas is still riding the heat wave down south.
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