“Hi David, In the 2008 book "The Oil Card" by James Norman the author postulated that that the oil pricing and availability have a long history of being employed as economic weapons by the United States. If this is the case then the price could still have plenty of downside as the effect on Russian, being a major oil exporter, is probably greater than the sanctions being applied.”

David Fuller's view

I have not read the book, but thanks for mentioning it. 

However, from what you say I believe the author is correct, except that the US lost that power for a number of years, when conventional production declined and before the fracking of shale oil and gas became possible on a commercial basis.  For that we can be grateful to the genius and persistence of George P Mitchell, the ‘Father of Fracking’, who I have mentioned before.

Saudi Arabia is obviously still the key swing producer of crude oil and my guess is that it is trying to knock out some of the more expensive production, from Iran to the USA.  Therefore, I do not think that prices can go much lower at this time.  The Saudi’s can produce at $20 but far more importantly, their budget requires prices over $80, although they could live off reserves for a number of months.  More importantly, US production of both conventional and shale oil is already under pressure from today’s prices and it will not want to see production dip, even though it has plenty of reserves.  Russia is already in big trouble at these prices.  I agree that today’s oil prices place greater pressure on Putin’s regime than the sanctions, although these are not ineffective. 

Technically, both WTI and Brent crude are holding near Thursday’s upside key day reversals which followed downward accelerations.