Saudis Want Allah To Set Oil Price – Wall Street Underground

By Nick Guarino | May 10, 2015

“Allah Will Decide the Oil Price”

Looks like a selling opportunity to me

If you been with me long enough you learn to smell fear and desperation. This Oil market rally back is a joke. But you’ve got to give them credit, they are giving it the full court press.

DO you smell that peculiar odor? Why it’s, it’s, it’s, yep for sure it’s BULLSHIT. GOD is very busy right now and ALLAH is not going to give the Saudis what they are desperate for and that is the good ole days of $100 plus oil.

To analyze oil we have to look at the 3 largest producers. Interesting they all produce around 10 million barrels a day.

Saudi Arabia

Now lets get to the bullshit part. What the Saudis don’t want you to know is this. They are desperate for money and are pumping the most oil EVER. They are producing over 10 million barrels a day.

Now why in an oil glut (I don’t give a shit what the sold out business press is telling you, it’s a glut) the biggest ever. Are they producing the most oil ever? Well let me give you a clue.

For over 50 years now the Saudi’s have been the swing producer, the ONLY one in OPEC. When the market was over supplied they cut production like a Wall Mart store cuts prices on over stocked items.

Saudis are pumping and exporting the most oil EVER

Why all of a sudden are they producing record amounts of oil? And why are they doing this in the biggest oil glut ever? Answer: Why it’s the war. Saudi’s are known for their big heads. And the fact they really really like to keep their heads connected to their bodies. It’s a culture thing. In their culture it’s common to get your body parts disconnected. Losing your head is often what happens when you lose a war. So you see why the Saudi’s have plenty of incentive to raise all the money they can. Winning the war is a matter of survival. And yes they are in a holy war. Shiite versus Sunni.

Bombing your fellow Islamic brother is very expensive. The bombs, fuel, spare parts, replacements and maintenance on your equipment is a killer. Not to mention the expense of “gifts” to the restless tribal leaders whose loyalty you’ve got to buy. Hey I’ve got one for you. What’s the definition of an honest Sheik. Why that’s one when you have bought him off he stays bought off. Here is their problem there ain’t no honest Sheiks. And loyalties change with the drop of a bag of money.

Here is the shit those business shows and breaking news guys just happened to forget to tell you. (besides the fact the fight of the century was fixed and Telea punched like a kitten) That is the fact that Saudi’s foreign cash reserves have dropped in half since it has chosen to go to war in Yemen. So that explains their pumping oil like there is no tomorrow. Because if they lose this war in Yemen there is no tomorrow for the Saudis.

The late Saudi King Abdula must be spinning in his grave. He swore they would never open up their stock markets and companies to the infidel foreign capitalist pigs. Which is why they have had a long standing policy of no foreign ownership of their companies and no foreign investors in their stock market. What you’ve got to understand is the fact that Never is not very long in the Middle East.

Besides pumping all the oil they possible can the Saudi’s did that never thing.

Saudi Arabia just opened its corporations and stock market to foreign investors

Let’s see how good your BS decoder is working. The Saudis are praying to Allah to help them in their desperate hour and raise the price of oil. The Saudis are producing oil like never before. In fact they are finally producing at maximum capacity. It’s the war, they need all the money that they can get their hands on. But it’s still not enough. Their free reserves have been cut in half.

All that bombing and killing costs big money. So all of a sudden they are letting in foreign investors. It’s very simple, they are desperate for cash. And that means they will pump and sell all the oil they can at any price.

America

Everyone else in the oil business will pump all they can as fast as they can. In fact this rally to over $60 a barrel from the most recent cycle low of $45 creates a another set of problems for the oil markets.

It’s those damn American frackers. There are a whole lot of holes that have been dug. The horizontal drilling has been completed. The expensive part is the fracking. That is where they pump in the chemicals and use hydraulics to fracture the wells. Under $50 a barrel it makes sense to just stop. And that is what happened.

New fracking is starting up again

Now that oil is over $60 a barrel it’s time to frack. These guys are not stupid. They will hedge the price and frack the wells. And that means almost immediately a whole lot of new oil will be hitting the markets. Which means this $60 plus price is doomed.

This means supply will continue to be at records. In fact the US is also producing record amounts of oil. US production is now over 10 million barrels a day. That’s a lot of oil someone has got to buy. In fact a lot of someones. And don’t be fooled, everyone is offering massive discounts. After we get into driving season, the refineries finish building inventories and visible supplies will jump.

Russia

What choice do they have but to pump the shit out of oil. Their economy was always oil dependent. Now that sanctions have killed their other businesses, the Russians rely upon oil exports more than ever. Talk about producing no matter what the price.

You need to understand in Ruble terms the price Russia oil companies see for a barrel of oil has not changed. And that is because sanctions have destroyed the value of their currency. Russian producers are in the enviable positions of paying almost all of there input costs in Ruble’s. Labor, materials and even pipe and shipping are Ruble based expenses.

And remember that despite the wallpaper, Russian oil companies are Russian state companies. And as long as Putin can fund his global ambitions, profits are not the motivator. It’s all about getting the cash flow. The last thing he is going to do is cut production.

The demand side for oil could not be uglier.

The world economy is in a major slow down. Markets and economies are crashing all over the world. China has reported that exports are plunging. And the next revision to US first quarter GDP will be negative. Let’s not get started about the Euro crises.

It’s a very simple equation. Demand is plunging and supplies are soaring. No one can afford to cut production nor is willing to.

So now you know why the Saudi’s are praying to Allah to set a higher price.

So we are down to the last hope for higher oil prices and that is for war in the Middle East to set a significant portion of the gulf states (Sunnis) oil wells on fire.

And that day is coming but not soon. So that means the oil price will drop for the time being. That makes trading oil potentially very profitable and very complicated.

Thank You,
Nick Guarino

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