over9k
So I didn't tell my wife, but I...
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Longer post, short version is at the bottom if you want the cliff notes version.
Oil news: Brent crude just cracked $50 a barrel.
Reason: China's just started buying up a shitload whilst it's still cheap/the american demand hasn't yet rebounded. In short, it's their last shot to get both some cheap oil and cheap tankers to store it in (and just leave it anchored offshore), so they've just ordered everything they can.
"The bulk of offshore crude inventory remains concentrated in Asia, accounting for more than 80% of total volumes, or 13.5 mn mt".
Here's the data:
You'll also note that the cargo exports (in the top left) I've spoken about in previous posts are almost as high as ever because hey, we're still buying all that chinese shite and importing it over to us.
Significance of the oil price? It makes a lot of previously offline oil rigs profitable to run again.
"U.S. benchmark oil prices will need to trade in a range of $35 to $45 a barrel next year just to keep production flat, according to a new report by BloombergNEF.
The report highlighted different estimates needed to keep output steady from the major oil plays. For the Permian and Eagle Ford, companies need oil at $35 to $40 a barrel. Meanwhile, the Bakken needs prices in the region of $40 to $45 while Denver-Julesburg probably requires about $45 a barrel.
Up until last week, West Texas Intermediate hadn’t settled above $45 a barrel"
Read the full report here: https://www.bloomberg.com/news/terminal/QKRR80T0G1LF
As a result, we've seen energy on an absolute tear today (NRGU, the triple levered big oil etf I mentioned I bought a few days ago, is up 12% as of the time of this post) even on a day where the market has gone defensive with the nasdaq, r2k, and even zoom (which, in my opinion, is THE barometer for how the market is feeling about the virus) back in the green but the dow & sp500 in the red.
So with this spike in chinese demand now holding the oil price comfortably above $45/barrel, we can expect to see a solid increase in operational rig count, which has been on a slow but steady increase for months:
And therefore a solid rebound in profits for the oil companies as it's now, you know, profitable to pump (sell) oil again. As of the time of this post, NRGU is up 12% and climbing.
I also suspect the americans will start exporting oil to china from their currently full onshore storage tanks as there is no longer any concern for american short term oil supply on account of the price now being high enough for the rigs to start operating again. Depending on the contracts, any as yet still unloaded tankers still at anchor in the united states might also be diverted over to china instead too.
It'll be interesting to see what the tank levels and tanker numbers are over the coming few weeks and I'll obviously update once I've got the data.
The short version of all of this is that china's decided to order a shitload of oil and tankers in the last moments before the american demand rebounds (on account of the vaccine deployment beginning soon) whilst it/they are still cheap and so energy/oil demand has rebounded the oil price to profitable levels weeks (months) before we were otherwise expecting it to. Ergo, the oil companies can start pumping (selling) oil at a profit again now rather than in several months like we were expecting.
The only question now remaining is political risk, because china's well & truly on the entire world's (and especially america's) shitlist, so if they do something wild like ban oil exports to china, oooooh boy...
Oil news: Brent crude just cracked $50 a barrel.
Reason: China's just started buying up a shitload whilst it's still cheap/the american demand hasn't yet rebounded. In short, it's their last shot to get both some cheap oil and cheap tankers to store it in (and just leave it anchored offshore), so they've just ordered everything they can.
"The bulk of offshore crude inventory remains concentrated in Asia, accounting for more than 80% of total volumes, or 13.5 mn mt".
Here's the data:
You'll also note that the cargo exports (in the top left) I've spoken about in previous posts are almost as high as ever because hey, we're still buying all that chinese shite and importing it over to us.
Significance of the oil price? It makes a lot of previously offline oil rigs profitable to run again.
"U.S. benchmark oil prices will need to trade in a range of $35 to $45 a barrel next year just to keep production flat, according to a new report by BloombergNEF.
The report highlighted different estimates needed to keep output steady from the major oil plays. For the Permian and Eagle Ford, companies need oil at $35 to $40 a barrel. Meanwhile, the Bakken needs prices in the region of $40 to $45 while Denver-Julesburg probably requires about $45 a barrel.
Up until last week, West Texas Intermediate hadn’t settled above $45 a barrel"
Read the full report here: https://www.bloomberg.com/news/terminal/QKRR80T0G1LF
As a result, we've seen energy on an absolute tear today (NRGU, the triple levered big oil etf I mentioned I bought a few days ago, is up 12% as of the time of this post) even on a day where the market has gone defensive with the nasdaq, r2k, and even zoom (which, in my opinion, is THE barometer for how the market is feeling about the virus) back in the green but the dow & sp500 in the red.
So with this spike in chinese demand now holding the oil price comfortably above $45/barrel, we can expect to see a solid increase in operational rig count, which has been on a slow but steady increase for months:
And therefore a solid rebound in profits for the oil companies as it's now, you know, profitable to pump (sell) oil again. As of the time of this post, NRGU is up 12% and climbing.
I also suspect the americans will start exporting oil to china from their currently full onshore storage tanks as there is no longer any concern for american short term oil supply on account of the price now being high enough for the rigs to start operating again. Depending on the contracts, any as yet still unloaded tankers still at anchor in the united states might also be diverted over to china instead too.
It'll be interesting to see what the tank levels and tanker numbers are over the coming few weeks and I'll obviously update once I've got the data.
The short version of all of this is that china's decided to order a shitload of oil and tankers in the last moments before the american demand rebounds (on account of the vaccine deployment beginning soon) whilst it/they are still cheap and so energy/oil demand has rebounded the oil price to profitable levels weeks (months) before we were otherwise expecting it to. Ergo, the oil companies can start pumping (selling) oil at a profit again now rather than in several months like we were expecting.
The only question now remaining is political risk, because china's well & truly on the entire world's (and especially america's) shitlist, so if they do something wild like ban oil exports to china, oooooh boy...