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Saudi Arabia has been over in Moscow working the room as they say with big deals and OPEC oil cuts the rolling headlines. Of note is the still no fixed date for the Aramaco IPO and no committment from Russia to participate. 

Saudi Aramco IPO RussiaImage: Al-Falih answers Aramco quesions in Moscow

Saudi Arabia Energy Minister Khalid Al-Falih was speaking at an energy industry panel moderated by CNBC in Moscow he said the IPO set to happen in the second half of 2018. The tone and body language was more of the same since the Kingsom's great IPO and gift to the world has been going to be launched for the past few years.

Al-Falih said more details would be released in due course but would not be drawn on a more precise date. The IPO has been a key componet for Prince Bin Salman's so called economic transformation. Obviously that has been delayed and the Saudi Royal families trips to the USA, Japan and now Russia are not unrelated. 

It is not insignificant that Russia has overtaken Saudi Arabia as the number one exporter to China. We also saw the U.S. exports contue to soar in the latest EIA report. Saudi Arabia is still maintaining its tone of arrogance with regard to being The World Oil power but at some point they have  to recognise the rubber meets the road. Not holding my breath however unless oil prices take a dramatic turn lower or KSA market share becomes an issue.

"The government is moving right ahead, as the chairman of Saudi Aramco I can tell you that our board remains focused on reviewing the preparations for that event by a very dedicated team within the company. It will take place in 2018 and there is nothing to indicate that that schedule is slipping," Al-Falih said he is more optimistic on oil market fundamentals than he had been for the last two or three years and that OPEC would continue to look at supply, demand and inventories as the three "key controllables."

He said oil demand had increased by 1.5 million b/d in 2017, and this would be sustained into 2018, adding that this was a "good planning basis."

As far as the U.S. goes he welcomed the contribution of US shale oil to global output (ok we all buy that one right?), but warned that it was unreasonable to expect shale oil production to "somehow spring up at certain places and grow exponentially." This had been proven to be unrealistic, he said, and "we are well over the hump."

"Floating inventories have almost vanished. The structure of the forward curve has flipped into backwardation," Falih said. Perhaps an aerial shot of Singapore and the Gulf tells us differently but why let facts can in the way of the story.

Russian Energy Minister Alexander Novak said he did not know whether Russian investors would participate in the Saudi Aramco IPO. He was speaking on the same conference panel and a cynic would argue was in the same vein as Russian President Putin saying he wasn't sure if he was going to run next year.

"In the first eight months, stock levels have halved. That contributes to the re-balancing of the market, and the return of investment we are observing," Novak said.

Novak said of the OPEC and Non-OPEC alliance "future cooperation, the recovery of the market in order to make energy sustainable and safe."

The tone and commentary at each get together for us seems to be more of flavor, wishful thinking than actuality att his point. The Aramco IPO is a clue to much.

Source: CNBC

From The Traders Community Research Desk

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