Submitted by Arthur Berman via ArtBerman.com,
Congress ended the U.S. crude oil export ban last week. There is apparently no longer a strategic reason to conserve oil because shale production has made American great again. At least, that’s narrative that reality-averse politicians and their bases prefer.
In practice, there is no bottom to how low oil prices can drop: as Canada's Bank of Montreal calculated over the weekend, as a result of an unsustainable supply-demand balance "something has to give", and for that to happen oil may drop to $25, $20 or even $15, as some aggressive put buyers are speculating. This is what the Canadian bank said:
We believe that the weakness in crude oil prices reflects a combination of fundamental factors and financial flows. Fundamentally there is simply too much oil.
When looking at the price of oil in 2015, Canada's Bank of Montreal admits it was wrong. Very, very wrong.
In our classic piece “ISIS Oil Trade Full Frontal: "Raqqa's Rockefellers", Bilal Erdogan, KRG Crude, And The Israel Connection,” we discussed how Masoud Barzani and the Iraqi Kurds transport some 600,000 b/d of crude to the Turkish port of Ceyhan in defiance of SOMO amid an ongoing budget dispute between Baghdad and Erbil.
Turkey facilitates this trade and we suggested that ISIS (which Turkey is suspected of supporting in order that the group might continue to destabilize Assad) may be using the same networks to get its illicit oil to market.
In OPEC's latest annual World Oil Outlook released on Wednesday, the now defunct cartel (courtesy of Saudi Arabia's insistence on vetoing any production limit) said that demand for its crude will slide to 2020, as rival supplies continue to grow. On the supply side, OPEC said it would need to pump 30.7 million barrels a day by the end of the decade, which is 1.7 million barrels more than it projected a year ago but well below, or some 1 million barrels less than the group pumped in November.