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Thursday, 1 December 2016

Column: The return of OPEC | Reuters

Column: The return of OPEC | Reuters:
"Two years ago, when the Organization of Petroleum Exporting Countries chose not to cut output and let oil prices collapse, many pundits penned obituaries for the producer group. Yet on Wednesday, OPEC seemed to breathe new life, agreeing to cut output 1.2 million barrels per day (bpd).

While OPEC may have been hibernating, the decision by Saudi Arabia, OPEC’s leading member, to let oil prices crash was always a pragmatic one, not an ideological one. OPEC has sent stark reminder that when circumstances change, it can change too -- and it would be foolish to write off OPEC as irrelevant.

In November 2014, U.S. shale oil output had been rising annually by around 1 million bpd, a stunning rate of growth. High and stable prices had pushed hundreds of billions of dollars into developing high cost sources of supply from the Arctic to the ultra-deepwater to the oil sands.

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Exclusive: How Putin, Khamenei and Saudi prince got OPEC deal done | Reuters

Exclusive: How Putin, Khamenei and Saudi prince got OPEC deal done | Reuters:
"Russian President Vladimir Putin played a crucial role in helping OPEC rivals Iran and Saudi Arabia set aside differences to forge the cartel's first deal with non-OPEC Russia in 15 years.

Interventions ahead of Wednesday's OPEC meeting came at key moments from Putin, Saudi Deputy Crown Prince Mohammed bin Salman and Iran's Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani, OPEC and non-OPEC sources said.

Putin’s role as intermediary between Riyadh and Tehran was pivotal, testament to the rising influence of Russia in the Middle East since its military intervention in the Syrian civil war just over a year ago."

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MIDEAST STOCKS-Gulf markets firm as OPEC deal lifts state revenue prospects | Reuters

MIDEAST STOCKS-Gulf markets firm as OPEC deal lifts state revenue prospects | Reuters:
"Petrochemicals companies led Gulf stock markets higher on Thursday in response to OPEC's first agreement on output cuts to prop up oil prices since 2008 -- a deal that could allow governments to ease austerity policies slightly.

Expectations for the deal had already boosted oil and Gulf bourses on Wednesday, but the agreement included bigger production cuts than many analysts had expected, lifting oil prices higher on Thursday. Brent crude hit a six-week high of $52.73 a barrel before retreating slightly.

Saudi Arabia is to take the lion's share of cuts, lowering production by almost 0.5 million barrels per day (bpd) to 10.06 million bpd, potentially hitting the kingdom's gross domestic product growth in coming quarters."

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Opec agreement: the winners and the losers

Opec agreement: the winners and the losers:
"Opec has won a deal that should, if properly implemented, go a long way towards easing a supply glut that has hammered prices for two-and-a-half years. But it will not come for free, and some members of the cartel will pay a higher price than others.

Saudi Arabia and its Gulf Arab allies, including Kuwait, United Arab Emirates and Qatar, have agreed to shoulder the bulk of the cuts. They are banking on a quick recovery in price to ensure they do not lose revenues or surrender market share to other suppliers.

Iran and Iraq, which sit outside the Gulf bloc in the Middle East, have sacrificed less. Most oil analysts see the limited concessions they made to let the deal succeed as largely face-saving technical measures to placate the Saudis."

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Oil prices surge, trading volume records smashed as OPEC and Russia agree output cut | Reuters

Oil prices surge, trading volume records smashed as OPEC and Russia agree output cut | Reuters:
"An agreement between oil producer club OPEC and Russia to produce less to drain a global glut sent prices soaring in record trading volumes on Thursday, even as analysts warned other producers will likely top up supply.

The Organization of the Petroleum Exporting Countries (OPEC)agreed on Wednesday its first oil output reduction since 2008 after de-facto leader Saudi Arabia accepted "a big hit" and dropped a demand that arch-rival Iran also slash output.

The deal also included the group's first coordinated action with non-OPEC member Russia in 15 years. On Thursday Azerbaijan said it was also willing to engage in talks on cuts."

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Texas Shale Is Big Winner as OPEC Deal Brightens Oil Outlook - Bloomberg

Texas Shale Is Big Winner as OPEC Deal Brightens Oil Outlook - Bloomberg:
"The U.S. shale industry, gutted by 2 1/2 years of bankruptcies, writedowns, credit downgrades and layoffs, is poised to step back from the brink, thanks to an old enemy: OPEC.

Abandoning a policy that sought to starve shale explorers and other high-cost drillers into submission, the Organization of Petroleum Exporting Countries relented on Wednesday and agreed to curb output by 1.2 million barrels a day. Other producing nations that aren’t cartel members also signaled plans to cut back by as much as 600,000 barrels, OPEC said.

The deal could boost prices through at least the first half of 2017, according to Chris Kettenmann, chief energy strategist at Macro Risk Advisors. The result: U.S. shale fields could raise the amount of crude produced within four months, said Antoine Halff, at Columbia University’s Center on Global Energy Policy. First to pounce should be drillers in the Permian Basin of Texas and New Mexico, home to gushers prolific enough to spur a recent land rush."

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MIDEAST STOCKS-Saudi, Qatar rise sharply on OPEC oil deal; petchems surge | Reuters

MIDEAST STOCKS-Saudi, Qatar rise sharply on OPEC oil deal; petchems surge | Reuters:
"Stock markets in Saudi Arabia and Qatar rose sharply in early trade on Thursday, led by petrochemicals on news of OPEC's first agreement on oil output cuts since 2008 to prop up prices.

Expectations for the agreement had already boosted oil prices and Gulf bourses in late trade on Wednesday, but the deal included bigger production cuts than many analysts had expected, so oil prices continued rising on Thursday morning. Brent crude hit a six-week high of $52.73 a barrel before falling back slightly.

The Saudi stock index gained 1.5 percent to 7,103 points in heavy trade during the first half-hour. It is technically very bullish after confirming on Wednesday a break of major technical resistance on its April peak of 6,876 points; that triggered a double bottom formed by this year's lows and pointing up to around 8,400 points in the long term."

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