Oil price discussion and analysis

[frugal.rock]

I really need to get to the next meeting of Cynics Anonymous.

I don't see much that's cynical...

Scenario
The servo gets a load of fuel delivered into tank at X $ set cost, but variable.
Servo sells with a margin.
POO goes up, servo puts prices up in quick fashion and attract a higher margin from fuel in tank.
OR
POO goes down, fuel in tank still cost the same, so price recedes slower to reduce the pinch on the servos margins.

And then you have the weekly price cycles which I'm guessing aren't really a thing, outside of major metro areas.

 

[KevinBB]

Petrol station economics have changed considerably over the past 20 years. Possibly longer, I can't remember those exact details.

In the good old days, the petrol station made most of their money on selling fuel and the mechanical side of things, prices were set by the owners to get them the maximum margin. I remember one of my first jobs was as a bowser boy, filling up cars as they rolled in to the bowser.

Now-a-days, in the age of electronic control, the wholesalers (generally) dictate what price the petrol station will charge for its fuel, and the gross margin to the owner is sometimes so low it doesn't pay all the bills. The modern petrol station owner relies heavily on income from the "store", something which the owners (generally) control, and from which the owners reap huge margins. The old time owners / mechanics are gradually pushed out and, when they are, the first thing the modern owner will do is upgrade the store and, especially in the country areas, put in some sort of hot take away food service. That's what helps them survive.

KH

 

[rederob]

IF you own WPL, STO, BPT, OSH or any other OZoiler does its year to date chart look like this?
What is really interesting about WTI pricing is that for the time being all news relates to more upside ahead.
International travel - air and cruises - is opening up and will add to vehicle demand as national economies continue to fully open up.
While the likes of WPL etc., may not be heading north, they are very profitable at current pricing, so maybe shareholders will get rewarded by decent dividends rather than price appreciation.

 

[rederob]

It's been a while in the making, but WTI crude oil's support price was broken overnight:

North America's oil patches are not in overdrive to find more to pump:


New northern hemisphere pandemic lockdowns might have assisted the overnight decline, but crude oil demand is always naturally weaker heading into the northern winter.

 

[noirua]

 

[rederob]

Looking at next level of support being tested?

Same chart on a 2-hourly scale:

Nowhere to hide!

 

[Ann]

The POO is still riding above that very long term falling trendline, so far making higher highs and higher lows.

"Goldman Remains Bullish On Oil Despite OPEC+ Decision"

Goldman Remains Bullish On Oil Despite OPEC+ Decision | OilPrice.com

Goldman Sachs commodity analysts remain bullish on oil prices despite yesterday’s decision by OPEC+ to add another 400,000 bpd to combined production next month

oilprice.com

...and the 15-year POO chart with no comments.

 

[divs4ever]

i am surprised OPEC+ promised to add , i would have expected them to take advantage of the 'lull ' and do any needed repairs/upgrades while the price is soft and maximize margins as the Northern storm/hurricane season limits US and North Sea production

but maybe they see a reason to delay delivery on that promise

 

[frugal.rock]

@Ann @divs4ever

I noticed some news outlets ran with somewhat misleading headlines...

It has been widely covered, but OPEC decided to add the 400 k bbl each month way back in August I think?
The increase each month was going to start September?
(I'm a little unsure of exact months/dates, so don't shoot me, just approximates)

So, the "increase" was what was already in place, old news!
Now, there were calls to increase above the already old agreement of the 400k, which OPEC ignored.

So with Omicron and misleading news headlines, oil dumps.

Still bullish on the weekly though and looking like a nice place in the cycle for a longer term entry (months) imo.
Daily has it starting to turn up, but I would expect a bit more bouncy bouncy ©® @finicky on the daily.

 

[divs4ever]

given the warm relations with the EU and US( sarcasm ) with some OPEC+ producers i am surprised OPEC+ will deliver that increase in the light of lower current prices , true some would ramp up output , but will all that extra be delivered

PS not that long back there was a fleet of tankers with no buyer to deliver to , i wonder what happened to them , you would have thought they sold into the recent highs , but did they ??

 

[rederob]

Uptrend remains intact:

 

[rederob]

16 more rigs added to North America's count over the last month:

Hardly a hive of activity and a bit surprising given what prima facie appear to be profitable oil prices.
So here's an explanation:

 

[rederob]

Nice end of year rally:

Interestingly the 1 January low of $47.20 was never breached in 2021.
Support at around $62 was tested 3 times from May and held up on each occasion.
A cold northern hemisphere winter could propel WTI back over $80, and beyond that we need to what the fundamental price drivers are suggesting.
2022 might be the first year we see see a decisive demand decline in oil due to EV penetration into the ICEv market, and if that's the case then POO might be stuck in the $60 - $80 range for a good while. Below $60 there's not much profit for the oilers so that's a price point which looks sustainable.

 

[rederob]

Been a while since the last post so here's the trend from 2015's resumption of an upside after falling precipitously from its 2014 high:


The short term trend remains bullish and it will be interesting to see if POO can push back over $100/bbl.
I see it as possible unless US drillers get back into it, which for the time being is not the case.
The other observation is that the BPs and Shells of the world appear to see less risk and easier returns by putting electricity into cars via charging stations rather than via petrol at the pump.

 

[Smurf1976]

It seems that something's gone missing. Crude oil in fact and 200 million barrels of it at that.

Bloomberg - Are you a robot?

www.bloomberg.com

The adviser to energy-consuming nations said on Wednesday that observable global oil inventories plunged by more than 600 million barrels last year. That would be fine were it not for the fact -- based on its estimates of supply and demand -- that the decrease should only have been 400 million.

I've had a look in the back shed and it seems that no, I don't have 200 million barrels of oil sitting there that I'd failed to notice. That's a shame since it means that (1) I don't have an unexpected USD 17 billion and (2) the IEA estimates do in fact seem to be in error.

So it would seem that the market's somewhat tighter than the IEA and thus many others have been thinking.

 

[ducati916]

So by my analysis, $WTI will probably be weak this week. The bull remains intact, simply vol.



If you are wanting to get long oil...hang off for about a week or so and look for circa 15% decline before buying-the-dip.



You will be looking for about $74 +/- to get in. On the chart, $75 looks like a short term support. Watch that level.

jog on
duc

 

[rederob]

You will be looking for about $74 +/- to get in. On the chart, $75 looks like a short term support. Watch that level.

Support is a shade over $76/bbl and last night's close was another medium term record high:

On the North American front there was a return of Canadian drillers but not much new action in America's oil patches.
I will post the Baker Hughes rig count on Saturday to see if these high prices trigger a renewed drilling response.
Technically the oil price is stretched so a dip is due. However, the northern hemisphere winter might sustain demand a bit longer so getting back under support could be a month away.

 

[over9k]

It seems that something's gone missing. Crude oil in fact and 200 million barrels of it at that.

Bloomberg - Are you a robot?

www.bloomberg.com

I've had a look in the back shed and it seems that no, I don't have 200 million barrels of oil sitting there that I'd failed to notice. That's a shame since it means that (1) I don't have an unexpected USD 17 billion and (2) the IEA estimates do in fact seem to be in error.

So it would seem that the market's somewhat tighter than the IEA and thus many others have been thinking.

Or someone has a hell of a lot more in reserve than they're letting on.

 

[Smurf1976]

Or someone has a hell of a lot more in reserve than they're letting on.

One unknown is to what extent end users have stockpiled?

Given the shortage of various other goods, it's at least possible that there's a lot of cars, trucks, buses, ships, industrial fuel oil tanks, heating oil tanks and so on that are fuller than they'd otherwise be. Individually minor but there's an awful lot of them so collectively it could be substantial.

 

[divs4ever]

One unknown is to what extent end users have stockpiled?

Given the shortage of various other goods, it's at least possible that there's a lot of cars, trucks, buses, ships, industrial fuel oil tanks, heating oil tanks and so on that are fuller than they'd otherwise be. Individually minor but there's an awful lot of them so collectively it could be substantial.

there would be SOME stockpiling ( like Glencore ) some sitting on viable wells waiting for a better price ( i am guessing many of those are in the US ) now end-users is the tricky one , in some places demand is down ( folks with travel restrictions ) in some places labour shortages , and SOME would be worried on the implications of a war ( they might need extra reserves for insurance )