The Saudi/Russia Oil Deal Is Worthless… Here’s Why
by Matt Badiali
WolfStreet.com
February 17, 2016
Political baloney doesn’t fix the fundamental issue.
Yesterday, a group of countries that include Saudi Arabia and Russia agreed in principle to freeze oil-production rates. On the surface, this sounds like a good thing. But it’s really just a bunch of bull.
As regular Growth Stock Wire readers know, oil prices fell from more than $105 per barrel in mid-2014 to about $30 per barrel now. That’s a 70%-plus fall in just 18 months.
According to the U.S. Energy Information Administration (“EIA”), the world’s oil supply rose from 91 million barrels per day in 2013 to 96.3 million barrels per day in October 2015 (the latest data available). That’s a 6% increase in supply in just two years.
Meanwhile, demand isn’t increasing as fast as supply is. World oil demand was 91.2 million barrels per day in 2013. The latest EIA estimate puts it around 92.8 million barrels per day as of September 2015 – an increase of less than 2%.
That means the “surplus” oil (supply minus demand) went from about -200,000 barrels per day to 3.5 million barrels per day. That’s why oil prices collapsed.
The Rest…HERE
