MARIA: WELCOME BACK LET'S GET A
CHECK ON OIL, CRUDE PRICES
HEADING LOWER AFTER SNAPPING
12-DAY DECLINE, LONGEST LOSING
STREAK EVER AFTER PRESIDENT
TRUMP CALLED ON OPEC AND SAUDI
ARABIA TO LOWER OIL COSTS WHILE
KEEPING PRODUCTIONS STEADY,
JOINING US RIGHT NOW PRICE
FUTURE GROUP ANALYST PHIL FLYNN,
PHIL, GOOD TO SEE YOU THIS
MORNING, THANKS FOR JOINING US.
THE SELLOFF IN PRICE OF OIL,
BEAR MARKET TERRITORY, FIRST
GIVE US 30,000 FEET, WHAT IS
GOING ON WITH OIL?
>> YOU KNOW, I BASICALLY THINK
THAT PRESIDENT DONALD TRUMP IS
DICTATING POLICY IN OPEC AND I
THINK THAT A LOT OF THIS DROP
HAS TO DO DIRECTLY WITH HIM.
HE GOT THE WORLD'S OIL PRODUCERS
ALL GEARED UP FOR THE IRANIAN
SANCTIONS THAT NEVER REALLY
HAPPENED AND ON IRANIAN OIL
EXPORTS, HE PULLED THE RUG UNDER
THEM AND RAISED PRODUCTION AND
THE MARKET GOT CAUGHT, EVERYBODY
THOUGHT WE WOULD HAVE A SHORTAGE
AND NOW THEY THINK THERE COULD
BE OVERSUPPLY AND THE OTHER
THING YOU CAN'T DISCOUNT A
LITTLE BAIT IS WEAK ECONOMIC
DATA COMING OUT OF EUROPE, YOU
HAD WEAK DATA IN JAPAN, WEAK
DATA IN GERMANY, SO THERE'S A
CONCERN THAT WE ARE GOING TO SEE
A GLOBAL SLOWDOWN FOR THE DEMAND
FOR OIL.
MARIA: RIGHT, BECAUSE OIL
TYPICALLY, YOU KNOW, INDICATES
THAT, INDICATER FOR THE GLOBAL
STORY AND YOU MENTIONED THE
PRESIDENT, DIERDRE, HE TWEETED
OUT THIS WEEK, HOPEFULLY SAUDI
ARABIA AND OPEC WILL NOT BE
CUTTING OIL PRODUCTION, OIL
PRICES SHOULD BE MUCH LOWER
BASED ON SUPPLY.
WHAT DID YOU -- I KNOW YOU
COVERED OIL?
>> YEAH, WE WERE TALKING ABOUT
THE SUPPLY ISSUES AND PHIL,
YESTERDAY, OF COURSE, YOU WERE
SAYING THAT TRADERS SEEM TO BE
MOVING ON THIS IDEA OF
OVERSUPPLY, RIGHT, LIKE WE ARE
PRODUCING RECORD, WE TALKED
11.6 MILLION-BARRELS LAST WEEK,
SAUDI ARABIA IS PUMPING, RUSSIA
IS PUMPING, SO ALL OF THAT WAS
KEEPING PRICES LOW, IT'S $56,
NEW PSYCHOLOGICAL BARRIER IS
THAT WHAT PEOPLE ARE LOOKING AT?
>> I DO THINK THERE'S A DANGER,
DIERDRE, YOU LOOK AT WHERE WE
WERE A MONTH AGO, WE WERE
WORRIED ABOUT UNDERSUPPLY AND
ALL OF A SUDDEN WE FLIP A SWITCH
A MONTH LATER AND WE ARE TALKING
ABOUT OVERSUPPLY, YOU TO BE
REALLY, REALLY CAREFUL HERE
BECAUSE OF VOLATILITY THAT OIL
PRODUCERS DON'T MAKE DECISIONS
THAT ARE TOO RASH.
I'M VERY DISTURBED BECAUSE I
KEEP HEARING PEOPLE USE THE WORD
OIL GLUT.
WE DON'T HAVE AN OIL GLUT, WE
HAD ONE IN 2015, SUPPLIES WERE
50, 60% ABOVE NORMAL, WE HAD A
HUGE BUILD IN CRUDE SUPPLY
OVERNIGHT ACCORDING TO AMERICAN
PETROLEUM INSTITUTE, ALMOST
9 BILLION-BARRELS, THAT ONLY
PUTS 2% ABOVE YEAR AVERAGE,
GLOBALLY THEY ARE BARELY ABOVE
AVERAGE SO IF WE ARE WRONG ON
THIS ECONOMIC SLOWDOWN AND
PRODUCERS CUT BACK TOO MUCH, WE
COULD BE UNDERSUPPLIED GOING
INTO WINTER.
>> PHIL, JAMES FREEMAN, WALL
STREET JOURNAL, SPEAKING OF THAT
UNDERSUPPLY POSSIBILITY WE'VE
READ A LOT IN THE LAST YEAR
ABOUT BOTTLENECKS GETTING U.S.
OIL TO REFINERIES, PIPELINES IN
PERMIAN BASIN, CAN YOU GIVE US
STATUS REPORT ON BOTTLENECKS IN
U.S. PRODUCTION CHAIN?
>> WE ARE STARTING TO SEE SOME
OF THEM LIFT A LITTLE BIT, WE
HAVE A NEW PIPELINE COME ON JUST
LAST WEEK, REALLY IN AN
ANTICIPATION TO REPLACE IRANIAN
OIL THAT THEY DIDN'T HAVE TO DO,
WE EXPECT IN THE FOURTH QUARTER
OF THIS YEAR, WE WILL SEE THAT
OPEN UP QUITE LIGHTLY, I HAVE TO
CAUTION EVERYBODY, IF THIS OIL
PRICE CONTINUES TO FALL, THERE'S
GOING TO BE LESS INCENTIVE FOR
THE COMPANIES TO GET RID OF
THESE BOTTLENECKS BECAUSE
THEY'RE HAVING A VERY DIFFICULT
TIME MAKING MONEY AT THESE PRICE
LEVELS, WE HAVE TO BE CAREFUL,
YOU KNOW, I KNOW DONALD TRUMP
WANTS TO TWEET DOWN THE PRICE OF
OIL BECAUSE IT'S GOOD FOR THE
ECONOMY AND THAT'S A GREAT THING
BUT HE HAS TO REMEMBER IF HE
TWEETS IT DOWN TOO FAR IT WILL
HURT ENERGY PRODUCERS.
MARIA: WHAT ARE YOU EXPECTING IN
TERMS OF THE PRICE HERE KNOWING
THAT, YOU KNOW, THE SUPPLY IS
THERE FROM THE U.S. AND THIS IS
NOT AN OVERNIGHT STORY, THIS IS
GOING TO CONTINUE, YOU KNOW,
SHOWING THAT THERE IS SUPPLY
FROM THE U.S. AND THERE IS
SUPPLY ELSEWHERE, I'M SURPRISED
THAT THE IRAN SANCTIONS DID NOT
MOVE THE MARKET THE OTHER WAY.
>> I AGREE WITH YOU ABSOLUTELY.
LISTEN, U.S. ENERGY STORY, IT'S
CHANGED THE SHELL PRODUCERS, THE
PROBLEM IS -- IS THAT THE DROP
IN PRICE COULD ACTUALLY INCREASE
SUPPLIES QUITE DRAMATICALLY AND
THE U.S. SHELL PRODUCERS, WHY
THEY'VE DONE GREAT JOB RAISING
PRODUCTION AT HISTORIC LEVEL,
THEY ARE NOT GOOD AT RAISING
VERY QUICKLY TO MEET SURGE IN
DEMAND.
IF THEY WE GET SURGE IN DEMAND
WE STILL HAVE TIGHT MARKET GOING