Oil price discussion and analysis

[Dona Ferentes]

Sunday night, Saudi Arabia admitted defeat in its attempt to maintain high world oil prices. They acknowledged being bested by the realities of the oil markets and consequently cut prices to their lowest point in over two years. OPEC+ (mainly Saudi Arabia and Russia) did not discuss further production cuts, only providing the usual details for next month's loadings.

OPEC+ had already claimed to reduce production by 2.2 million barrels per day in an effort to balance the market, with little lasting impact. This led to Angola leaving OPEC, and other African producers refused to discuss baseline quotas and caps.

Following December's inconclusive attempts by OPEC+ to stabilize oil prices after the brief boost from the October 7 Hamas attack on Israel, markets were hoping for more discussions on production cuts to support prices. Attacks on shipping in the Red Sea by Houthi militants from Yemen (supported by Iran) briefly raised prices but had no lasting impact.

Major oil traders are still sending large crude cargoes through the Red Sea and Suez Canal, with only Western-owned container and other vessels being targeted.

On Sunday, Saudi Arabia cut the February official selling price (OSP) of its flagship Arab Light crude to Asia to the lowest level in 27 months, reducing it by $US2 a barrel. This move indicates Saudi Arabia's intention to maintain market share and compete against cheaper crudes from Iran and Russia.

The United States is also contributing to lower oil prices, producing approximately 13.2 million barrels of crude per day in the last week of 2023, while its inventories of gasoline and distillate both increased by more than 10 million barrels. US crude exports also rose by more than 1 million barrels per day to a record 5.2 million barrels per day during the same period.

On Monday and Tuesday, the market's response to this news was a sell-off, with US West Texas-style crude and Brent losing more than 3% before stabilizing during Tuesday's Asian session. These falls more than reversed the 2% gain in the first trading week of 2024.

 

[qldfrog]

Sunday night, Saudi Arabia admitted defeat in its attempt to maintain high world oil prices. They acknowledged being bested by the realities of the oil markets and consequently cut prices to their lowest point in over two years. OPEC+ (mainly Saudi Arabia and Russia) did not discuss further production cuts, only providing the usual details for next month's loadings.

OPEC+ had already claimed to reduce production by 2.2 million barrels per day in an effort to balance the market, with little lasting impact. This led to Angola leaving OPEC, and other African producers refused to discuss baseline quotas and caps.

Following December's inconclusive attempts by OPEC+ to stabilize oil prices after the brief boost from the October 7 Hamas attack on Israel, markets were hoping for more discussions on production cuts to support prices. Attacks on shipping in the Red Sea by Houthi militants from Yemen (supported by Iran) briefly raised prices but had no lasting impact.

Major oil traders are still sending large crude cargoes through the Red Sea and Suez Canal, with only Western-owned container and other vessels being targeted.

On Sunday, Saudi Arabia cut the February official selling price (OSP) of its flagship Arab Light crude to Asia to the lowest level in 27 months, reducing it by $US2 a barrel. This move indicates Saudi Arabia's intention to maintain market share and compete against cheaper crudes from Iran and Russia.

The United States is also contributing to lower oil prices, producing approximately 13.2 million barrels of crude per day in the last week of 2023, while its inventories of gasoline and distillate both increased by more than 10 million barrels. US crude exports also rose by more than 1 million barrels per day to a record 5.2 million barrels per day during the same period.

On Monday and Tuesday, the market's response to this news was a sell-off, with US West Texas-style crude and Brent losing more than 3% before stabilizing during Tuesday's Asian session. These falls more than reversed the 2% gain in the first trading week of 2024.

As soon as poo goes below the $60 a barrel, US shale oil vanished, there is a huge destruction of resources there and the cycle can restart

 

[mullokintyre]

As soon as poo goes below the $60 a barrel, US shale oil vanished, there is a huge destruction of resources there and the cycle can restart

That of course may well be the aim.
Shut down the competition than have the larger share of the market, thus a greater clout.
Mick

 

[divs4ever]

I still use it and many do when doing corner posts, using sump oil from mower etc in the hole before putting the post.
Helps again termite and rot.
I know there are some heavy metals but is it worse than arsenic which was used in treated pine logs up to very recently

but arsenic is a natural mineral .... ROFL ( and was formerly used as a tonic )

 

[Bailxtrader]

A few key pointers on USO...

• A Reuters poll published earlier this week showed that global oil supplies are expected to keep prices around $80 a barrel this year.
• International Energy Week in London may also bring some headlines for the oil market.
• This week will be a key one for WTI, with a bullish break above 80.00 potentially setting the stage for a quick continuation toward the mid-80.00s.

As the chart above shows, WTI is testing a key resistance zone, and 3-month highs, in the 78.50-80.00 area. The commodity has stretched somewhat away from its rising trend line, so a near-term pullback can’t be ruled out, but the two-week consolidation range just below that resistance area hints at strong buying pressure.

This week will be a key one for WTI, with a bullish break above 80.00 potentially setting the stage for a quick continuation toward the mid-80.00s. Meanwhile, traders may be willing to buy dips into the 75.00-76.00 range if they emerge.

 

[Garpal Gumnut]

A few key pointers on USO...

• A Reuters poll published earlier this week showed that global oil supplies are expected to keep prices around $80 a barrel this year.
• International Energy Week in London may also bring some headlines for the oil market.
• This week will be a key one for WTI, with a bullish break above 80.00 potentially setting the stage for a quick continuation toward the mid-80.00s.

View attachment 172093

As the chart above shows, WTI is testing a key resistance zone, and 3-month highs, in the 78.50-80.00 area. The commodity has stretched somewhat away from its rising trend line, so a near-term pullback can’t be ruled out, but the two-week consolidation range just below that resistance area hints at strong buying pressure.

This week will be a key one for WTI, with a bullish break above 80.00 potentially setting the stage for a quick continuation toward the mid-80.00s. Meanwhile, traders may be willing to buy dips into the 75.00-76.00 range if they emerge.

Thanks @Bailxtrader

Just the chart I was looking for and for which I was looking. It would appear the buyers are set for WTI.

With all the fighting over The Books it would appear that the fundamentals are aligned with the chart. $80 seems extraordinarily cheap for a barrel given the geopolitics which will only get worse as the masses in many countries go to the polls in the northern hemisphere.

I was going to lighten my Aussie Oilers given the recent fall in divies from some but this helicopter view of the WTI price makes me inclined to hold atm.

gg

 

[Bailxtrader]

Thanks @Bailxtrader

Just the chart I was looking for and for which I was looking. It would appear the buyers are set for WTI.

With all the fighting over The Books it would appear that the fundamentals are aligned with the chart. $80 seems extraordinarily cheap for a barrel given the geopolitics which will only get worse as the masses in many countries go to the polls in the northern hemisphere.

I was going to lighten my Aussie Oilers given the recent fall in divies from some but this helicopter view of the WTI price makes me inclined to hold atm.

gg

Friday’s rally saw crude oil break a major resistance zone between $78.00 to $79.10. This is where oil prices had repeatedly sold off from on multiple occasions since November. Now that we have a clean break above it, the technical path of least resistance has been confirmed to the upside.

The bulls need to hold their ground here to maintain the bullish momentum. If so, WTI could be heading towards the next potential resistance area around $82.00 next. An additional bullish target to keep an eye on is at $84.40, which corresponds with the 61.8% Fibonacci retracement level of the downswing from September.

The line in the sand for me is at around $78.00 now, where the rally in the latter half of last week occurred. Should oil prices break that level, then last week’s breakout signal will be invalidated. In this potential scenario, we could see a sharp withdrawal of bids, leading to a sharp correction. However, this is not my base case scenario.


-- Written by Fawad Razaqzada, Market Analyst