Golden Yuan: Oil Up 2.9% as OPEC, Russia Talk Cheaply
London (May 15) Russia, China, Saudis Talk Oil Back Up Despite Rise of Golden Yuan
•China pledges to buy 'more US oil'
•Russia and Saudis agree to extend output cuts through Q1 of 2018
•OPEC attempts to keep prices stable has thus far been ineffective
Crude bouncing off the back of Asian jawboning last night after a precipitous.
Some Perspective: OPEC Ineffective in Face of Growing Shale Oil. Market drops from a post OPEC collaboration high of $54 to $44. The bounce started, and the new Asian Order starts talking it up.
It is the stated intent and has been the policy shift for the 3 nations in the headline to begin escalating their oil deals in Yuan based exchanges. This is the beginning of the end of the Petrodollar. As they cut more deals to end the USD dominance as a currency reserve, their words will increasingly publicly contradict those actions.
We feel the public statements are just an attempt to slow the descent of Oil in USD terms while they pump as much as they can. The Chinese need the Yuan to appreciate against the USD for the plan to have maximum effect. And we suspect the more Gold the Chinese accumulate, the more likely that is to happen. And then, the price of oil in USD can drop more, at which point it will not matter.
In the meantime, Asian talk flexes its growing influence as these three countries achieve what they desire, with Oil jumping back up 2.8% overnight. Don't believe the hype we say.
US sellers of oil will be forced to sell USD for Yuan in order to do deals where the real demand lies as the Yuan rises in reserve currency status.
A barrel of West Texas Intermediate for June delivery was trading more than a dollar higher at $49.05 by 5:21 a.m. Eastern Time. The jump comes after Saudi Arabia and Russia said at a joint press conference in Beijing that they favor prolonging curbs on the output of global producers through the end of the first quarter of 2018. Also in China, Wang Yilin, Chairman of China National Petroleum Corp., said the country will import more crude oil and natural gas from the U.S.
Futures added as much as 2.8 percent in New York, climbing to the highest intraday price in almost two weeks. While output curbs that started Jan. 1 are working, global inventories aren’t yet at the level targeted by OPEC and its allies, Saudi Energy Minister Khalid Al-Falih said in Beijing alongside his Russian counterpart, Alexander Novak. The ministers agreed the deal should be extended through the first quarter of 2018 at the same volume of reductions, they said.
Source: MarketSlant
