It’s a new year, but it’s the same old story in the crude market. The most recent two price slumps bottomed out amid the low liquidity of New Year’s Eve trading, but not even an outbreak of undiplomatic language among the Middle East’s major producers could resuscitate the price as the old year was seen off.
During the Cold War, western intelligence agencies became obsessed with the minutiae of the Soviet Union’s upper echelons. Reliable information was hard to come by because the Kremlin hid its secrets behind walls behind walls, and because the power structure was so impregnable the devil, so it was thought, had to be in the details.
When UK finance minister George Osborne presented his spending review this week there was a clear message: difficult decisions would be taken, so the country could live within its means.
It’s a well-rehearsed line from a government with an ideological leaning against what it deems unnecessary public spending. It is very keen on letting people know that they should be able to stand on their own two feet, and the language it uses — “strivers, not shirkers”, “a lower welfare, higher wage economy” — reflects this.
Nearly 18 months into ‘lower for longer’ and the strain is beginning to show. This week alone, three independent E&P firms have gone bust — Swedish independent PA Resources, Canada’s Iona Energy and UK-listed Kea Petroleum all called it a day and have variously entered administration, begun liquidation proceedings or made other moves to slowly stop operating.
The Opec meeting in Vienna is still a month away, but some member states must be wondering whether it will be worth the trip.