Oil prices have reached 'bottom' - Iraqi minister

Oil prices rose today on bargain-hunting after sliding to near six-year lows a day earlier, while Iraq claimed the market was set to recover after recent heavy falls. 

Brent North Sea crude for delivery March climbed 50 cents to stand at $48.49 a barrel in London deals. 

US benchmark West Texas Intermediate for March moved up 22 cents to $46.69 a barrel compared with yesterday's close. 

Iraqi Oil Minister Adel Abdul Mahdi today predicted that world prices would not fall much further after a plunge of nearly 60% since June. 

"Our estimate is that the prices have reached the bottom. It is very difficult to drop lower than this," Abdul Mahdi told a conference in Kuwait. 

"We do not find any real justification for the big and persistent drop in oil prices," said the Iraqi minister whose country is the second largest OPEC producer after Saudi Arabia. 

But non-OPEC oil producer Oman described as bad politics and bad business the cartel's November decision to make no cut in output, which sent world prices crashing along with other factors, such as weak demand and oversupply. 

Oman, a Saudi neighbour which has been badly hit by the resulting loss in revenue, said it saw no logic in the move. 

"I fail to comprehend how market share became more important than revenue," Omani Oil and Gas Minister Mohamed al-Rumhi told the Kuwait conference today. 

Saudi Arabia had said the decision was necessary to prevent the cartel losing market share after a sharp increase in US shale oil production. 

Rumhi said that before the decision, with oil trading at $100 a barrel, the Organisation of Petroleum Exporting Countries (OPEC) was earning $3 billion a day from its output of 30 million barrels per day. 

"When earnings dropped to $2.9 billion, $2.8 billion, they got up to defend market share ... and as a result, revenues dropped to roughly $1.5 billion," the Omani minister said. "This is politics that I don't understand. Business? This is not business." 

Analysts, meanwhile, do not expect today's rebound in prices to last. 

The International Monetary Fund this week cut its forecast for global economic growth this year, citing weaker momentum in nearly all leading economies but the US. 

The IMF said in a report that poorer prospects in China, Russia, the euro area and Japan would hold world growth to just 3.5% this year and 3.7% in 2016.

Oh yay!  We reached bottom!  Only sunshine and unicorns going forward!


Wishful thinking.  They still are pumping into the glut and making things worse...


Propaganda

I am certainly no expert, but my gut feeling is we will see the prices drop into the 30-35 dollar range before rebounding into the 50 dollar range by summer. Of course if they don't want competition from the shale oil in the US, then they will have to maintain their prices in that range indefinitely. Much over that (about $70 if I remember right,) and the shale oil rigs will fire back up ...

I think you are right about the 70 buck figure on breakeven for shale extraction.

The other component of the fracking is LPG which prices somewhat differently than crude.  I pulled up the 12 month chart on it and it doesn't look pretty at all

http://www.indexmundi.com/commodities/?commodity=propane&months=12

Right now I am feeling bad for the people in North Dakota which has been in boom times for quite a while now.  Suddenly, rigs are shutting down and jobs are going away with no idea when or if they will ever come back up.  There's a bunch of people hurting and a bunch more that will be hurting as a result

At best, we are looking at a decrease in the RATE that oil is dropping

http://www.nasdaq.com/markets/crude-oil.aspx