WEBVTT - Again's Kilduff on OPEC Cut: Oil Still Going Below $40 (Audio)

0:00:04.000 --> 0:00:08.600
<v Speaker 1>Broadcasting live to New York Bloomberg eleventh to Washington, d C.

0:00:08.800 --> 0:00:14.040
<v Speaker 1>Bloomberg to Boston, Bloomberg twelve hundred to San Francisco Bloomberg

0:00:14.160 --> 0:00:18.000
<v Speaker 1>nine to the country ju Exam Channel one nine and

0:00:18.120 --> 0:00:21.640
<v Speaker 1>around the globe the Bloomberg Radio plus appen Bloomberg Got

0:00:21.640 --> 0:00:27.640
<v Speaker 1>Gone is taking stock. I'm Kathleen Hayes along with Pim Fox.

0:00:28.160 --> 0:00:32.519
<v Speaker 1>An apparent agreement at Opek to curtail production has been

0:00:32.560 --> 0:00:35.920
<v Speaker 1>responded to in markets around the world, not the least

0:00:35.960 --> 0:00:38.199
<v Speaker 1>of which because it could mean higher oil prices that

0:00:38.240 --> 0:00:40.920
<v Speaker 1>could boost inflation, that could help central banks like the

0:00:40.960 --> 0:00:43.960
<v Speaker 1>Bankage of Campan. We're gonna be speaking to John Kilda

0:00:44.080 --> 0:00:46.600
<v Speaker 1>from again Capital. Guess we'll be speaking about the price

0:00:46.640 --> 0:00:49.040
<v Speaker 1>of oil and what happens next. But right now we

0:00:49.080 --> 0:00:51.120
<v Speaker 1>know what happens next. We're going to Charlie Pellett in

0:00:51.120 --> 0:00:54.440
<v Speaker 1>the Bloomberg newsroom, and I think very much Pim Fox,

0:00:54.440 --> 0:00:56.920
<v Speaker 1>thank you, Kathleen Hayes. Let us begin with crude oil,

0:00:57.000 --> 0:00:59.520
<v Speaker 1>because we have got oil at a one month high.

0:00:59.520 --> 0:01:02.000
<v Speaker 1>After all, Peck agreed to reduce production for the first

0:01:02.040 --> 0:01:06.320
<v Speaker 1>time in eight years, surprising traders a big shock. Yesterday.

0:01:06.360 --> 0:01:09.480
<v Speaker 1>They were expecting members to maintain output. Here's where we

0:01:09.520 --> 0:01:13.160
<v Speaker 1>stand in terms of crude. West Texas Intermediate up one

0:01:13.480 --> 0:01:16.480
<v Speaker 1>two percent right now, up fifty six cents w t

0:01:16.720 --> 0:01:20.319
<v Speaker 1>I for sixty of barrel. Brent crude up six tenths

0:01:20.319 --> 0:01:22.399
<v Speaker 1>of one percent hard by twenty nine cents of barrel

0:01:22.440 --> 0:01:26.440
<v Speaker 1>for ninety eight right now on Brent stocks following banks

0:01:26.520 --> 0:01:30.040
<v Speaker 1>are retreating amid growing concern that Deutsche banks woes will

0:01:30.080 --> 0:01:33.119
<v Speaker 1>spread to the global financial sector, a topic we were

0:01:33.200 --> 0:01:36.840
<v Speaker 1>just discussing right here on Bloomberg. Shares of Deutsche Bank.

0:01:36.840 --> 0:01:41.360
<v Speaker 1>They're down now by six point nine percent. Bloomberg Exclusive.

0:01:41.440 --> 0:01:44.280
<v Speaker 1>This morning, Bloomberg Radio and Television sat down with US

0:01:44.360 --> 0:01:48.680
<v Speaker 1>Treasury Secretary Jack lou in Mexico City. U S Mexico

0:01:48.760 --> 0:01:52.360
<v Speaker 1>relationship is very important. It's important as an economic relationship.

0:01:52.400 --> 0:01:56.120
<v Speaker 1>It's important as a security relationship in the region. The

0:01:56.200 --> 0:01:59.160
<v Speaker 1>US relationship with the Western hemisphere for our entire history

0:01:59.160 --> 0:02:03.320
<v Speaker 1>has been central to our sense of our security interests

0:02:03.360 --> 0:02:07.840
<v Speaker 1>and our economic interests. More positive views unemployment, The Laborty

0:02:07.840 --> 0:02:10.880
<v Speaker 1>Department said jobless claims did rise last week by three

0:02:10.880 --> 0:02:13.919
<v Speaker 1>thousand to two hundred fifty four thousand, that estimates were

0:02:13.960 --> 0:02:18.000
<v Speaker 1>for an advance up to two hundred sixty thousand gold

0:02:18.280 --> 0:02:21.000
<v Speaker 1>up to thirty ounce. The thirteen twenty one again there

0:02:21.040 --> 0:02:23.480
<v Speaker 1>of two tenths of one percent. The ten year up

0:02:23.560 --> 0:02:25.920
<v Speaker 1>five thirty seconds with the yield of one point five

0:02:26.000 --> 0:02:29.959
<v Speaker 1>five percent. Costco reports after the closing bell Costco shares

0:02:30.040 --> 0:02:33.519
<v Speaker 1>trading Laura now by one point two percent, again recapping

0:02:33.600 --> 0:02:36.320
<v Speaker 1>equities lower twenty eight minutes to go ahead of the close,

0:02:36.440 --> 0:02:39.239
<v Speaker 1>the SMP down fifteen, a drop of seven tenths of

0:02:39.360 --> 0:02:43.320
<v Speaker 1>one percent, and right now thirty two on Wall Street

0:02:43.360 --> 0:02:45.840
<v Speaker 1>to look at the other stories. Thank you, Charlie from

0:02:45.840 --> 0:02:48.760
<v Speaker 1>the Bloomberg Newsroom. I'm Jill Schneider. This news update is

0:02:48.760 --> 0:02:51.160
<v Speaker 1>brought to you by the Jeep Grand Cherokee, the most

0:02:51.200 --> 0:02:54.760
<v Speaker 1>awarded suv ever. The Grand Cherokee continues to raise the

0:02:54.840 --> 0:02:59.000
<v Speaker 1>bar with its luxurious interior and legendary four by four capability.

0:02:59.400 --> 0:03:02.639
<v Speaker 1>Drive one your local Jeep dealer today. A rush hour

0:03:02.720 --> 0:03:05.680
<v Speaker 1>commuter train traveling at a high rate of speed, crashed

0:03:05.720 --> 0:03:08.280
<v Speaker 1>through a barrier at the busy Hoboken station this morning,

0:03:08.600 --> 0:03:11.200
<v Speaker 1>killing one person and injuring more than one hundred others.

0:03:11.520 --> 0:03:14.600
<v Speaker 1>That's according to Jersey Governor Chris Christie, who briefed the

0:03:14.720 --> 0:03:17.399
<v Speaker 1>media along with New York Governor Andrew Cuomo a short

0:03:17.480 --> 0:03:20.880
<v Speaker 1>time ago. New Jersey Transit employee Michael Larson was about

0:03:20.960 --> 0:03:25.720
<v Speaker 1>thirty feet away and saw the accident unfolding at speed.

0:03:26.200 --> 0:03:30.960
<v Speaker 1>It went over to block basically through the air, traveled

0:03:30.960 --> 0:03:34.880
<v Speaker 1>about another came to arrest when it went hit the

0:03:34.920 --> 0:03:38.400
<v Speaker 1>wall of Luke Pomo was sitting on another train and

0:03:38.520 --> 0:03:43.680
<v Speaker 1>also saw the crash happen. All these metal on the

0:03:43.760 --> 0:03:47.960
<v Speaker 1>ground and hips, furst and waterflown everywhere. The National Transportation

0:03:48.000 --> 0:03:52.080
<v Speaker 1>Safety Board is investigating. India has retaliated for a deadly

0:03:52.160 --> 0:03:55.680
<v Speaker 1>strike against its soldiers. Bloomberg's Michael Barr has more. India

0:03:55.800 --> 0:03:58.920
<v Speaker 1>has hit back after an attack on Indian soldiers earlier

0:03:59.000 --> 0:04:01.600
<v Speaker 1>this month. In the has says it has attacked terrorist

0:04:01.680 --> 0:04:05.240
<v Speaker 1>camps just across the border in Pakistan. According to India's

0:04:05.280 --> 0:04:09.920
<v Speaker 1>Director General the Military Operations, heavy casualties were inflicted on militants.

0:04:10.200 --> 0:04:13.400
<v Speaker 1>It is the biggest military escalation sent to standoff in nineteen.

0:04:14.400 --> 0:04:17.080
<v Speaker 1>On September eighteenth, an attack on an Indian army camp

0:04:17.160 --> 0:04:21.120
<v Speaker 1>in Cashmere left eighteen soldiers dead. Global News twenty four

0:04:21.160 --> 0:04:24.159
<v Speaker 1>hours a day, powered by More than twenty d journalists

0:04:24.360 --> 0:04:28.159
<v Speaker 1>and analysts in more than one twenty countries. I'm Jill Schneider.

0:04:28.360 --> 0:04:32.000
<v Speaker 1>This is Bloomberg, Charlie, and we thank you, and we're

0:04:32.040 --> 0:04:35.880
<v Speaker 1>brought to you by the American Arbitration Association. Business disputes

0:04:35.880 --> 0:04:40.400
<v Speaker 1>are inevitable, resolve faster with the American Arbitration Association, the

0:04:40.480 --> 0:04:44.520
<v Speaker 1>global leader in alternative dispute resolution for over eighty five years.

0:04:45.000 --> 0:04:49.520
<v Speaker 1>More at eight r dot org recapping equities lower oil higher,

0:04:49.720 --> 0:04:52.280
<v Speaker 1>SMP down fourteen A dropped there of seven tenths of

0:04:52.320 --> 0:04:55.560
<v Speaker 1>one percent. West Texas Intermediate crude up now by one

0:04:55.640 --> 0:04:59.440
<v Speaker 1>point three percent. I'm Charlie Pellett. That's a Bloomberg business flash.

0:05:00.400 --> 0:05:03.400
<v Speaker 1>You're listening to taking stock with Kathleen Hay's and Pim

0:05:03.480 --> 0:05:07.400
<v Speaker 1>Box on Bloomberg Radio. Oh yes, let's talk about oil

0:05:07.440 --> 0:05:10.680
<v Speaker 1>and find out about this new agreement. Will it hold?

0:05:10.839 --> 0:05:13.120
<v Speaker 1>Let's find out more from John killed Off he is

0:05:13.200 --> 0:05:18.640
<v Speaker 1>founding partner again a capital John, this opeque agreement. Just

0:05:18.880 --> 0:05:22.720
<v Speaker 1>explain it to us. Iran doesn't actually have to observe

0:05:22.880 --> 0:05:26.440
<v Speaker 1>the new caps well, that the devil is in the

0:05:26.520 --> 0:05:29.800
<v Speaker 1>details and we haven't necessarily met the devil yet because

0:05:29.960 --> 0:05:33.000
<v Speaker 1>we won't know the quota table until they get together

0:05:33.120 --> 0:05:36.840
<v Speaker 1>on November. So there are stories swirling that they'll be

0:05:36.920 --> 0:05:41.480
<v Speaker 1>exemptions for Iran, Nigeria and Libya because of the outages

0:05:41.520 --> 0:05:45.320
<v Speaker 1>they suffered and because of the Ran sanctions regime that

0:05:45.720 --> 0:05:49.320
<v Speaker 1>just getting out of. So um. It looks like the

0:05:49.360 --> 0:05:51.640
<v Speaker 1>Saudis are going to have to bear almost fully the

0:05:51.720 --> 0:05:53.480
<v Speaker 1>production cut. We don't know if they're going to be

0:05:53.600 --> 0:05:57.080
<v Speaker 1>up for that. And also too before they announced their

0:05:57.120 --> 0:06:00.360
<v Speaker 1>table of production limits, they're looking to read chat to

0:06:00.440 --> 0:06:03.720
<v Speaker 1>an open producers such as Russia, and Russia has just

0:06:03.920 --> 0:06:08.520
<v Speaker 1>been going, uh like gangbusters, increasing their production. There was

0:06:08.560 --> 0:06:10.440
<v Speaker 1>a great story on the Bloomberg. You guys have been

0:06:10.480 --> 0:06:13.880
<v Speaker 1>covering this extremely well. Just last month they raised production

0:06:14.200 --> 0:06:17.240
<v Speaker 1>four hundred thousand barrels a month on month. So there's

0:06:17.240 --> 0:06:19.520
<v Speaker 1>a lot of work to be done here. Of course,

0:06:19.560 --> 0:06:21.760
<v Speaker 1>it was Saudi Arabia a couple of years ago adopted

0:06:21.800 --> 0:06:24.360
<v Speaker 1>a policy of just you know, helping to flood the

0:06:24.360 --> 0:06:26.720
<v Speaker 1>world with oil. You know, push the price low enough,

0:06:26.800 --> 0:06:28.720
<v Speaker 1>you'll you'll push out a lot of the marginal producers,

0:06:28.920 --> 0:06:31.280
<v Speaker 1>you know, shell producers in the States, for example. That

0:06:31.400 --> 0:06:33.360
<v Speaker 1>worked to an extent, but now fully and of course

0:06:33.480 --> 0:06:36.280
<v Speaker 1>some might say it. You know, it was a they

0:06:36.320 --> 0:06:39.640
<v Speaker 1>shot themselves in their own foot. Uh do you know

0:06:39.680 --> 0:06:43.920
<v Speaker 1>anything about the inner conversations? What's what's the chatter in

0:06:44.360 --> 0:06:48.320
<v Speaker 1>in the energy market among oil experts like you about

0:06:48.960 --> 0:06:51.760
<v Speaker 1>what Saudi Arabia is thinking? Now, this is a big mistake,

0:06:51.880 --> 0:06:53.880
<v Speaker 1>has gone far enough? What? What? What do you think?

0:06:53.960 --> 0:06:56.560
<v Speaker 1>This is the strength of the argument that this is

0:06:56.640 --> 0:07:00.400
<v Speaker 1>totally blown up in their face. UM and Iran emerging

0:07:00.520 --> 0:07:04.240
<v Speaker 1>from this as the strongest player UH in OPEC. UH

0:07:04.480 --> 0:07:09.000
<v Speaker 1>sociaty financial position has deteriorated very rapidly to having to

0:07:09.040 --> 0:07:12.240
<v Speaker 1>go to market to raise debt and the I p O,

0:07:12.400 --> 0:07:16.880
<v Speaker 1>the Saudi Aramco Crown Jewel and they're they're not paying suppliers,

0:07:16.960 --> 0:07:20.640
<v Speaker 1>they're they're not giving out raises, they're not giving out bonuses. Uh.

0:07:20.800 --> 0:07:23.119
<v Speaker 1>They've hit the end of the road much more quickly

0:07:23.160 --> 0:07:25.600
<v Speaker 1>than I think they realized. And I also don't think

0:07:25.600 --> 0:07:27.680
<v Speaker 1>they'd be sitting here two and a half years later

0:07:27.960 --> 0:07:29.720
<v Speaker 1>when they embarked on this. I think they thought they

0:07:29.760 --> 0:07:31.800
<v Speaker 1>were gonna be able to wash out the U S

0:07:31.840 --> 0:07:35.200
<v Speaker 1>shale industry much more effectively and also break the back

0:07:35.280 --> 0:07:38.160
<v Speaker 1>of others with an OPEC so this has gone really

0:07:38.240 --> 0:07:41.040
<v Speaker 1>off the rails for them. It's an embarrassment really and

0:07:41.320 --> 0:07:43.160
<v Speaker 1>uh and that the position that I Ran is it

0:07:43.280 --> 0:07:45.960
<v Speaker 1>is quite interesting because because of the way they hunker

0:07:46.080 --> 0:07:49.000
<v Speaker 1>down to ride out the sanctions, regime set them up

0:07:49.040 --> 0:07:52.120
<v Speaker 1>beautifully for these tough times. So their economy is actually

0:07:52.160 --> 0:07:55.400
<v Speaker 1>growing four percent, while all the other oil based economies

0:07:55.440 --> 0:07:58.840
<v Speaker 1>are in significant contraction. So John Kildeff, I want to

0:07:58.880 --> 0:08:01.280
<v Speaker 1>try to understand what's going on behind the scenes here.

0:08:01.400 --> 0:08:05.400
<v Speaker 1>Iran will pump more oil and then they'll spend some

0:08:05.600 --> 0:08:09.680
<v Speaker 1>of that money to back the Bashar al Assad regime

0:08:09.960 --> 0:08:14.560
<v Speaker 1>in Syria, while the Saudis will pump their oil and

0:08:14.920 --> 0:08:18.960
<v Speaker 1>they will continue to use that money to support the

0:08:19.120 --> 0:08:22.880
<v Speaker 1>rebels who are fighting the bush are Al Assad regime,

0:08:23.360 --> 0:08:26.160
<v Speaker 1>and Russia will continue to pump oil and spend that

0:08:26.320 --> 0:08:29.760
<v Speaker 1>money fighting the rebels on behalf of the bush are

0:08:29.800 --> 0:08:33.679
<v Speaker 1>Al Assad regime. Does that make sense absolutely? It's the

0:08:33.760 --> 0:08:35.599
<v Speaker 1>extent you see Russia on the same side of this.

0:08:36.240 --> 0:08:38.480
<v Speaker 1>You're not going to get any really hard agreement in

0:08:38.559 --> 0:08:41.360
<v Speaker 1>a way now a land has turned the table on

0:08:41.440 --> 0:08:44.000
<v Speaker 1>the Saudis and that they're able to keep the price low,

0:08:44.360 --> 0:08:47.760
<v Speaker 1>still make money, still cover their budget same with the Russians.

0:08:47.800 --> 0:08:50.760
<v Speaker 1>The Russians are now budgeting for four to five dollar oil. Uh,

0:08:50.920 --> 0:08:53.679
<v Speaker 1>so they too can can ride this out. And it's

0:08:53.760 --> 0:08:56.719
<v Speaker 1>the Saudis who cannot ride this out, who needs a

0:08:56.840 --> 0:08:59.880
<v Speaker 1>higher price to really keep things together, and so far

0:09:00.000 --> 0:09:02.240
<v Speaker 1>their side of that fight. So they're going to have

0:09:02.320 --> 0:09:05.000
<v Speaker 1>the least resources of the salities to help with the rebels.

0:09:05.120 --> 0:09:06.880
<v Speaker 1>And so I think that's why you're seeing a very

0:09:06.920 --> 0:09:11.160
<v Speaker 1>well timed ratcheting up, unfortunately of the bombing of Aleppo

0:09:11.320 --> 0:09:16.640
<v Speaker 1>and other parts of Syria. So what is your forecast

0:09:16.840 --> 0:09:20.000
<v Speaker 1>for the price of oil? Now? Where's it going? Well?

0:09:20.000 --> 0:09:21.640
<v Speaker 1>I think it's it's still going to go lower. I

0:09:21.679 --> 0:09:24.400
<v Speaker 1>think what you've seen here is is the short covering rally.

0:09:24.440 --> 0:09:26.520
<v Speaker 1>I think a lot of folks have gotten scared out

0:09:26.600 --> 0:09:29.120
<v Speaker 1>because of the at least came to an agreement OPEC

0:09:29.200 --> 0:09:31.679
<v Speaker 1>that is, but it's short lives. The fact that we

0:09:31.720 --> 0:09:34.679
<v Speaker 1>didn't get over forty eight dollars a barrel today UH

0:09:35.040 --> 0:09:38.280
<v Speaker 1>set us up for another technical failure here, So prices

0:09:38.320 --> 0:09:40.880
<v Speaker 1>should trend down. I think we go below forty before

0:09:40.920 --> 0:09:43.240
<v Speaker 1>we go anywhere else. I don't see the market coming

0:09:43.280 --> 0:09:47.120
<v Speaker 1>into balance until late next year. Uh. Particularly with the

0:09:47.200 --> 0:09:49.520
<v Speaker 1>increased production that we're going to get from from the

0:09:49.559 --> 0:09:52.439
<v Speaker 1>SEC countries we mentioned Russia, O, Libyan, Nigeria, and even

0:09:52.480 --> 0:09:54.160
<v Speaker 1>Iraq and Iran for that matter. By the way, the

0:09:54.400 --> 0:09:57.280
<v Speaker 1>Iraqis are screaming over the d L are very upset

0:09:57.280 --> 0:09:59.320
<v Speaker 1>about it because it looks like they're supposed to take

0:09:59.360 --> 0:10:03.040
<v Speaker 1>a big hit on their recent production hike as well. John,

0:10:03.160 --> 0:10:05.600
<v Speaker 1>just quickly give you about thirty seconds tell us about

0:10:05.640 --> 0:10:09.080
<v Speaker 1>the importance and the change that having the US as

0:10:09.120 --> 0:10:13.199
<v Speaker 1>a swing oil producer makes to the market. Well, I

0:10:13.280 --> 0:10:14.839
<v Speaker 1>know there's a big debate as to whether or not

0:10:14.960 --> 0:10:17.880
<v Speaker 1>we are or can be energy independent. UH was certainly

0:10:17.920 --> 0:10:22.720
<v Speaker 1>an energy player. I you know, this has been a miracle. UH.

0:10:22.840 --> 0:10:26.400
<v Speaker 1>And the technology and advancements keep coming. They keep sleep

0:10:26.440 --> 0:10:30.120
<v Speaker 1>the frackers, the shale players keep reducing their costs of drilling.

0:10:30.400 --> 0:10:32.719
<v Speaker 1>They are back in the game, and I think it's

0:10:32.920 --> 0:10:36.400
<v Speaker 1>it's an amazing story that's gonna continue to help profitable economy.

0:10:37.240 --> 0:10:39.360
<v Speaker 1>John killed us, thank you so very much for joining

0:10:39.400 --> 0:10:43.520
<v Speaker 1>us today founding partner of Again Capital. Yes, there seems

0:10:43.559 --> 0:10:46.000
<v Speaker 1>to be some kind of deal led by Saudi Arabia

0:10:46.000 --> 0:10:48.480
<v Speaker 1>in OPEC to cut back on production. But John says

0:10:48.520 --> 0:10:51.880
<v Speaker 1>prices are going to keep falling anyway. I'm Kathleen Hayes

0:10:51.880 --> 0:11:02.320
<v Speaker 1>along with pim Fox, and this is Bloomberg. Coming up

0:11:02.360 --> 0:11:05.840
<v Speaker 1>on taking stock. We're gonna hear from Peter Cheer Breen Capital,

0:11:05.920 --> 0:11:09.760
<v Speaker 1>find out about winning and losing trades. Also talk about

0:11:09.840 --> 0:11:13.000
<v Speaker 1>Deutsche Bank that shares it down six and a half percent.

0:11:13.320 --> 0:11:14.359
<v Speaker 1>This is Bloomberg.