Oil/gas price discussion

Open interest for West Texas Intermediate $US100 call options for June increased 10 per cent last week as traders bet on a near 30 per cent surge in prices. And since September, open interest between $US105 and $US150 a barrel strike prices have increased 14 times.

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And the overnight surge in oil prices boosted the energy sector which gained 3 per cent today. Woodside Petroleum share price rose 4.1 per cent to $24.35 and Beach Energy climbed 5.3 per cent to $1.38.

Despite the likelihood of OPEC maintaining their plan to increase oil output by 400,000bpd in March during their Wednesday meeting, price could still look to test $90 within the coming days.

With OPEC+ already struggling to hit output quotas, the Russia-Ukraine conflict has only added to an already tight oil market. Western countries have threatened imposing heavy sanctions if Russia chooses to invade Ukraine, but there is a growing belief that Russia may then retaliate by withholding oil. Therefore, as tensions in Eastern Europe continue to build, it is likely to push oil prices higher.

All trading carries risk, but it should be interesting to see whether the situation on the Ukrainian border eclipses the OPEC meeting in terms of significance to oil prices this week.

Have oil prices topped out after 8 straight weeks of gains, or this simply a breather before starting a new leg higher?

Oil reversed course this morning as reports suggested that the US and Iran are now in the final stages of nuclear talks, opening the door to a return for Iranian oil to help alleviate some of the recent supply-side disruptions. Looking at the futures chart, crude oil opened below the uptrend support today, and is currently trading around 4% lower. If prices end up closing below $90 it could result in a deeper pullback, leaving a potential retest of the former resistance near $85 as a possibility.

However, the situation in Eastern Europe is far from over with US officials saying that Russia have actually added more troops along the Ukrainian border. If tensions re-escalate from here, it could help oil hold above $90, allowing for any overbought readings to be worked-off before the rally towards $100 gets back underway.

All trading carries risk, but it should be interesting to see how this develops from here.

Oil prices surged again this morning, trading at their highest level since 2008, as the White House is considering an embargo on Russian oil.

With Russian exports making up around 7% of global supply, it’s no surprise that many analysts are forecasting a lot more upside still to come. However, prices have risen already around 65% YTD, and with the majority of those gains coming in the last month, is the potential supply threat from the Ukraine-Russia war now priced in?

Reports also suggest that a nuclear deal with Iran is edging closer, which could allow over 2 million bpd to return to the market. Although this would take a few months to reach, and is still less than Russia’s output, the return of Iranian oil would significantly reduce pressure on the oil market.

All trading carries risk, but it should be interesting to see which aspect has more weight on market sentiment, and whether continuous positive reports regarding the nuclear deal can help oil ease from its current highs over the short-term.

CityIndex said:

is the potential supply threat from the Ukraine-Russia war now priced in?

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A particular issue at present is the LNG market.

Under "normal" circumstances LNG is always a cheaper fuel than anything refined from oil. That being so, in any situation where there's a choice to use one or the other gas is the preferred fuel with oil only as backup.

Most common situation there is power generation. Either the ability to burn two fuels in the same facility (not all can do that but many can) or alternatively where there's both gas and oil-fired plant in the same grid and it comes down to which runs as priority and which is used only for peak load or as backup.

In normal circumstances gas consistently wins, to the point that if someone's burning oil in power stations then that's normally a sure sign that they're in some degree of technical or other practical trouble trying to keep the lights on. It's a last resort option normally.

At present however well for anyone exposed to the LNG price the reverse is true, it's now cheaper to burn oil-based fuels than to burn gas and to the extent switching does occur, that pushes oil consumption up. There's quite a few reports of fuel switching now occurring especially in Asian countries.

That's a complication that doesn't normally exist.

I sold a third of exposure via ooo.bought late around 8 sold above 10 in a matter of weeks.nearly 30%...and not sure we will stop there so only a partial sell

New geopolitical tensions in the Middle East are adding to on-going supply concerns coming from the war in Ukraine. Reports are suggesting that rebels from Yemen attacked Saudi Arabia over the weekend, and apparently targeted a natural gas plant as well as an Aramco fuel depot.

Despite declining over 5%, WTI crude bounced strongly off its 50-day EMA last week, potentially indicating that price was simply overextended, and needed to pullback before bulls stepped in to support another leg higher.

All trading carries risk, but it should be interesting to see if this news and the lack of de-escalation in Ukraine sees oil target a new high in the coming days. However, if tensions in either region show significant signs of easing, oil could deepen its pullback this week.

CityIndex said:

New geopolitical tensions in the Middle East are adding to on-going supply concerns coming from the war in Ukraine. Reports are suggesting that rebels from Yemen attacked Saudi Arabia over the weekend, and apparently targeted a natural gas plant as well as an Aramco fuel depot.

Despite declining over 5%, WTI crude bounced strongly off its 50-day EMA last week, potentially indicating that price was simply overextended, and needed to pullback before bulls stepped in to support another leg higher.

All trading carries risk, but it should be interesting to see if this news and the lack of de-escalation in Ukraine sees oil target a new high in the coming days. However, if tensions in either region show significant signs of easing, oil could deepen its pullback this week.

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Oil price has rebounded +20% (over these past 4 day's) back up to about US $114

Took an investment punt on BYE as it's "2 well drilling program" commences in April 2022 !

Telamelo said:

Oil price has rebounded +20% (over these past 4 day's) back up to about US $114

Took an investment punt on BYE as it's "2 well drilling program" commences in April 2022 !

Byron Energy Ltd (ASX:BYE) Share Price - Market Index

Today’s BYE share price, stock chart and announcements. View dividend history, insider trades and ASX analyst consensus.

www.marketindex.com.au

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It should be interesting to see how oil trades over the rest of the week, as it now seems like the EU won’t in fact follow the US with an embargo on Russian oil. Although, with the NATO meeting still to come, and reports suggesting Biden is preparing another round of sanction on Russia, volatility is likely to remain elevated.

WTI ended up getting rejected from a band of resistance coming from the 2011 and 2013 highs, just below $115, yesterday. However, it’s important to keep in mind that all trading carries risk as prices still heavily linked to headlines concerning the war.

Telamelo said:

Oil price has rebounded +20% (over these past 4 day's) back up to about US $114

Took an investment punt on BYE as it's "2 well drilling program" commences in April 2022 !

Byron Energy Ltd (ASX:BYE) Share Price - Market Index

Today’s BYE share price, stock chart and announcements. View dividend history, insider trades and ASX analyst consensus.

www.marketindex.com.au

Click to expand...

CityIndex said:

It should be interesting to see how oil trades over the rest of the week, as it now seems like the EU won’t in fact follow the US with an embargo on Russian oil. Although, with the NATO meeting still to come, and reports suggesting Biden is preparing another round of sanction on Russia, volatility is likely to remain elevated.

WTI ended up getting rejected from a band of resistance coming from the 2011 and 2013 highs, just below $115, yesterday. However, it’s important to keep in mind that all trading carries risk as prices still heavily linked to headlines concerning the war.

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It would also appear that Russia is slowing down the repair of a Kazach pipe according to the FT, impacted by weather, to match the sanctions from the USA and EU.

gg